Profitable FDI businesses pay low taxes

According to GSO (General Statistics Office of Vietnam)’s February 6 report on the development of businesses in centrally run cities in 2017 and the 2010-2016 period, FDI businesses have achieved the highest turnover growth among economic sectors. They recorded a turnover of around US$216 billion in 2016 and an average growth of 23% in the 2010-2016 period.

They earned VND327,400 billion profits, accounting for 45.9% of the profits earned by businesses from all sectors. However, they made the smallest contribution to the State budget with just VND250,900 billion, said Pham Dinh Thuy, director of Industry Statistics Department, GSO.

Mr Thuy attributed the situation to many reasons. First, FDI businesses involved in hi-tech production are exempted from different types of taxes, including corporate income tax.

For example, Samsung Bac Ninh and Samsung Thai Nguyen have been exempted from corporate income tax for many consecutive years. Some FDI businesses even enjoy the corporate income tax for 30 years, which is only half the amount domestic businesses have to pay. Meanwhile, many other hi-tech FDI enterprises are exempted from import taxes.

In addition to tax policies imposed by the State, many localities have implemented their own tax exemption policies to attract more FDI businesses, said Mr Thuy.

Besides, some FDI businesses have made corrupt use of policies and transferred pricing that State agencies have not detected or even imposed no sanctions.

The GSO suggests that the Government and relevant ministries should double check the incentives offered by localities to ensure equality for all economic sectors, said Mr Thuy.