Vietnam’s Ministry of Finance has announced a five-month extension of value-added tax (VAT), personal income tax and land rent fee payments worth around USD 1.3 billion for businesses affected by the COVID-19 epidemic. This measure is expected to come in effect soon to support businesses in overcoming cash flow difficulties. The budget revenue this year is not expected to decrease because enterprises must complete payment to the State budget before 31 December 2020.
If the draft is approved by Prime Minister Nguyen Xuan Phuc, the measure will benefit three groups of businesses:
- The first group includes businesses, organizations, individuals, groups of individuals and households that are active in agricultural, forestry and fishery, production and processing of food, textile and garment, footwear, production of rubber products, production of electronic products and computers, and automobile Manufacturing and assembling.
- The second group includes those operating in the transport sector (railway, road, waterway, aviation, warehousing and supporting activities for transportation), accommodation and catering services, travel agents and tour businesses.
- The third group includes small and super small enterprises as defined by the regulations of the Law on Supporting Small and Medium Enterprises.
The COVID-19 epidemic has directly affected many industries and production fields in Vietnam, causing supply chain disruptions and indirectly destabilizing the economy. A forecast by the Ministry of Planning and Investment indicates that if the epidemic is controlled within the first quarter of 2020, Vietnam’s economic growth rate is expected to be 6.25%, down 0.55% compared to the 6.8% growth set out in the Government’s Resolution No.01/NQ-CP on January 1, 2020. In the scenario of the epidemic being controlled in the second quarter of 2020, the economic growth is projected to drop to 5.96%, a decrease of 0.84% against the previous target.