Vietnam has effectively loosen its restrictions relating to Covid-19 and have restarted its economy during the past week. Vietnam has introduced a number of measures to help businesses overcome Covid-19 challenges. Understandably, small and medium size businesses continue to request tax reductions to help them continue their operations, but in the past week the Ministry of Finance rejected several proposals to reduce taxes to help revive production and trade and support businesses affected by Covid-19. The reasons for the rejection of the tax reduction proposals and other business headlines during the past week are listed below.
The past week spotlight
Finance Ministry rejects tax reduction proposals
Aviation is the only sector that enjoys a 50% cut in environmental protection tax - PHOTO: VNA
The Ministry of Finance rejected the proposal to reduce corporate income tax by 50% for small- and medium-sized enterprises and cooperatives because it overlaps some policies that will soon be effective.
The ministry also disagreed with the proposal to reduce VAT by 50% for input materials as well as goods and services that have been severely affected by Covid-19 to reduce input costs for enterprises. It explained that the proposal had been rejected because VAT is paid by consumers, not enterprises.
Let’s look at some other related financial and business news during the past week:
1. Further clarity to new investment laws
International investors are seeking for more positive changes in mergers and acquisitions transactions and market access conditions in the latest draft amendments to the Law on Investment to keep them moving forward with their future ventures.
2. Vietnam’s FDI hits $12.33 billion in the first 4 months
Total foreign investment inflows in Vietnam reached US$12.33 billion in the first four months of this year, a year-on-year decrease of 14.5 per cent due to the impact of the COVID-19 pandemic, according the Ministry of Planning and Investment’s Foreign Investment Agency (FIA).
The four-month period saw 984 new foreign-invested projects licensed with a total registered capital of $6.78 billion, down 9 per cent in term of number of projects but up 27 per cent in value year-on-year.
Prime Minister Nguyen Xuan Phuc on April 28 agreed with the Ministry of Industry and Trade’s proposal to resume rice export from May 1, in accordance with Decree 107/2018/ND-CP on rice export business.
4. US cuts anti-dumping taxes on Vietnamese catfish products
The US Department of Commerce (DOC) has lowered anti-dumping duties on tra fish (pangasius) products from Việt Nam following the official conclusion of its 15th period of review (POR15) from August 1, 2017 to July 31, 2018, according to the Trade Remedies Authorities of Vietnam under the Ministry of Trade and Industry (MoIT).
5. New decree’s vitamin boost to small- and mid-sized business
With the recent promulgation of Decree No.37/2020/ND-CP, the Vietnamese government offers a lifeline for small- and medium-sized enterprises as a necessary preparation to cope up with negative impacts of the coronavirus pandemic on the economy. Nguyen Hong Hai and Hoang Le Quan, lawyers at Lexcomm Vietnam LLC, analyse the potential inspirations of Decree 37 to the continuing growth of Vietnam’s economy.
6. Vietnam exports 415 million face masks this year
A surge in global demand has enabled Vietnam to export over 415 million face masks in the year to April 19.
The country had shipped 415.7 million cloth masks, fine dust masks and two-layer cotton masks for $63.2 million during the period, according to Vietnam Customs data.
Vietnamese textile and garment firms have been receiving constant orders from the U.S. and Europe due to the spread of the Covid-19 pandemic. Japan has been the largest importer buying 32.7 million masks, followed by South Korea, Germany, the U.S., Hong Kong, Singapore, Poland, and Australia.
7. Standard Chartered lowers Việt Nam 2020 growth forecast to 3.3%
Standard Chartered Bank has forecast Việt Nam’s economic growth rate to slow down to 3.3 per cent in 2020.
In its recently published Global Focus – Economic Outlook report for Quarter 2, 2020, titled ‘Darkest before the dawn’, Chidu Narayanan, its senior economist for Asia, said: “Việt Nam is now more integrated with the global economy via its booming manufacturing sector; its trade-to-GDP ratio has risen to 300 per cent, among the highest in Asia, signifying its high dependence on global demand.
Gradual recovery from some of Vietnam’s key trade partners are plugging gaps in the disrupted global supply chain and helping the Southeast Asian nation take advantage of new opportunities arising despite the challenging times.
The COVID-19 pandemic is a constantly evolving global health crisis that is creating a huge range of challenges for individuals and businesses around the world. As governments take unprecedented action to prevent the spread of the virus, businesses are facing an ever-more complex environment to operate within.
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