Vietnam Promulgates Fiscal Stimulus Measures

Sept. 25 – On August 21, 2012, Vietnam’s Ministry of Finance promulgated Circular 140/2012/TT-BTC (hereinafter referred to as “Circular 140”), clarifying the country’s 2012 fiscal stimulus measures which aim to resolve some of the present tax difficulties facing organizations and individuals.

The preferential tax policies listed in Circular 140 include a 30 percent reduction in the enterprise income tax payable in 2012 for the following enterprises:

• Small and medium-sized enterprises (SMEs), excluding SMEs doing lottery, real estate, securities, finance, banking, insurance or producing goods, or providing services subject to special consumption tax
• Labor-intensive enterprises (employing more than 300 workers) that produce, process and treat: agricultural products, forestry products, aquaculture products, textiles and garments, leather and footwear, and electronic components; and enterprises building socio-economic infrastructural constructions

Furthermore, enterprises and organizations providing catering services are exempted from corporate income tax for the year 2012 as long as such enterprises and organizations sustain the prices of their services the same as the end of 2011.

The entities and individuals listed below will be exempt from value-added tax and personal income tax in 2012:

• Households and individuals providing hostel services for laborers, workers, students
• Households and individuals providing nursery services
• Households and individuals providing catering services as long as such households and individuals sustain the prices of their services the same as the end of 2011

Also, personal income tax will be exempted from July 1, 2012 until December 31, 2012 for individuals earning taxable incomes from salaries, wages and business that belong to Level 1 of the partially progressive tariff specified in Article 22 of the Law on Personal Income Tax No. 04/2007/QH12.

Circular 140 is largely similar to last year’s Circular 154 (2011), however there are some small, but significant changes. For example, all individuals and enterprises that wish to take advantage of these tax reductions are required to fill out the necessary forms with responsible local tax authorities.

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