Vietnam’s Government has issued Decree No. 60/2012 that allows a 30% corporate income tax cut in 2012 for selected small- and medium- sized enterprises (SMEs), to stoke up its slowing economy.

Small- and medium- sized enterprises (SMEs) are those that meet the requirements of capital or labor as defined in the Article 1, Item 3 of Decree No 56/2009/NĐ-CP by the government.

Labor-intensive enterprises in the fields of agriculture- forestry and fishery, garment, footwear, electronic spare-part production and infrastructure construction are also subject to the tax cut. In such cases, these firms must have at least 300 regular laborers in 2012.

The tax reduction, however, will not be applied for SMEs engaging in lottery, securities, financial, banking, and insurance and being under major corporations, according to the decree.

In the decree, the Government also offers exemptions of value-added tax and corporate income tax for enterprises involved in the business of food catering and house for rent for workers and students and those who provide kindergarten services. However, those supplying food portions for others in the area of transport and aviation are not eligible for these incentives.

In the same period of time, if an enterprise is entitled to different tax incentives for the same taxable income, it can choose the most preferential incentive, it said.

In case enterprises are already enjoying other incentives of corporate income tax under the prevalent law, then the tax reduction as provided for in this decree will be calculated on the rest sum after deducting the tax incentives.

The corporate income tax is now set at 25%, and the Ministry of Finance proposes cutting the rate to between 22% and 23% next year. Companies in Vietnam are facing a tough time due to a lack of capital, high volume of inventory, high lending interest rates and a paralyzed real- estate market, as well as other factors.

The decree also exempted individual income tax from July 1 to December 31, 2012 for those whose income was within the level 1 of taxable income regulated in Article 22 of individual income tax law.

Source Chinh phu, StoxPlus