Tax, fee, and land rent exemption, reduction, and deferral policies: a driving force for business recovery and growth

	Ministry to further extend tax payment deferrals for pandemic-hit businesses
	Deferred tax payments totaled VND nearly 106 trillion
	Over VND317 billion was raised through post-clearance audits

Citizens conducting tax transactions at the Tax Sub-department of Thu Duc City (HCMC). Photo: T.D

Reducing financial pressure on businesses

From 2020 to 2023, the National Assembly and the Government issued numerous policies to support businesses and individuals in restoring production and business, especially tax and land rent deferral policies. Notably, businesses highly appreciate the tax, fee, and land rent reduction and deferral policies implemented during this period. These policies represent immediate financial relief, enabling businesses to allocate resources towards production and business activities while bolstering their financial capacity.

Mr. Nguyen Trong Hoang, CEO of Phuc Thinh Packaging Co., Ltd., shared with reporters that the 2% reduction in Value Added Tax (VAT) not only helps reduce production costs but also lowers product prices. As a result, the company's products have become more competitive, stimulating consumption and expanding production and business activities. Currently, the company has recorded a 30% increase in orders and is ramping up production to meet the increasing demand in the last months of the year.

Regarding the tax payment deferral policy, Mr. Hoang believes that this policy is especially meaningful for small and medium-sized enterprises (SMEs), which often face difficulties in accessing bank loans due to a lack of collateral. Tax deferral in the current context is extremely important and essential, supporting them to maintain operations and develop sustainably in the future.

Mr. Nguyen Huu Hong, Director of Saigon Thien Phu Gia Construction Co., Ltd., stated that currently, small businesses operating in the construction sector are experiencing difficulties as the prices of construction materials and labor increase, while the number of projects decreases. In this context, the tax payment deferral will help businesses reduce financial pressure, providing them with the means to overcome these challenges.

The need for long-term policies

Mr. Su Ngoc Khuong, Senior Director of Savills Vietnam, emphasized that the tax deferral policy not only helps businesses reduce financial pressure, solve the problem of capital shortage and ensure tax compliance, but also positively impacts real estate businesses. Specifically, this policy creates conditions for businesses to restructure their finances, allowing them more time to arrange and mobilize capital from legal sources; simultaneously, tax deferral helps businesses avoid legal risks when paying land use fees on time, thereby protecting the interests of customers and investors.

Tax and fee deferral policies can be compared to short-term, interest-free loans from the State, helping businesses overcome difficulties without incurring interest expenses. In return, businesses are only required to ensure that they pay the full amount of taxes and fees by the stipulated deadline. This is a practical incentive, helping businesses reduce their financial burden, while providing them with more resources to maintain and expand their business activities.

Based on experiences from previous implementations, representatives of the Ho Chi Minh City Business Association stated that the policy of extending the deadline for paying taxes and land rent has had a significant positive effect, directly benefiting business activities with immediate impact. In the context of recovering orders but with many potential fluctuations, deferred tax payments serve as a temporary source of capital that helps businesses with cash flow, supporting their production and business activities.

A highlight of the reasonably expansionary fiscal policy is the Government's issuance of Decree No. 64/2024/ND-CP dated June 17, 2024, allowing for the deferral of Value Added Tax, Corporate Income Tax, Personal Income Tax, and land rent payments in 2024.

Speaking at a recent dialogue with businesses from five southern provinces and cities, Deputy Director General of the General Department of Taxation, Mai Son, stated that in the spirit of always supporting businesses and taxpayers in overcoming difficulties, particularly given the serious consequences of natural disasters and epidemics, the tax sector has proactively proposed and reported to the Ministry of Finance for submission to the Government and the National Assembly numerous tax relief solutions. These include directing tax authorities at all levels to focus on implementing tax exemption, reduction, and deferral policies for fees and land rents to support businesses and individuals from 2019 to the present. Notably, in the first nine months of 2024, the total amount of taxes, fees, and land rents deferred, exempted, and reduced is estimated at over VND 102,000 billion.

According to Ms. Nguyen Thi Cuc, Chairwoman of the Vietnam Tax Consultants Association, in the context of an unstable economy, support policies such as tax deferral and reduction need to be maintained and expanded. Ms. Cuc recommends that the Government consider extending the application period of these policies so that businesses have sufficient time to recover, thereby creating a foundation for sustainable development in the future.

In addition, experts suggest that it is not advisable to solely focus on tax cuts, as this will affect the goals and strategies for meeting local budget revenue targets. To support businesses effectively, it is necessary to implement solutions in a synchronized manner, which should include long-term solutions such as administrative procedure reform, application of information technology, and improved access to capital.