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Government defers income tax collection to spur spending

Vietnam would lose around VND1 trillion (US$57.3 million) every month if it waives income tax for five months, Deputy Minister of Finance Do Hoang Anh Tuan said The government will delay the collection of personal income tax until the end of May to help stimulate spending amid the global economic crisis.

Personal income including salaries, profit from real estate and stock transactions and other investment returns would not be taxed until May, the government said in a statement posted on its website Monday. The National Assembly will decide then if the payments will be waived completely or just delayed. The economy expanded 6.2 percent in 2008, the slowest pace in nine years, as the global recession cut demand for Vietnamese exports in the US and Japan. The government is targeting 6.5 percent growth for this year. The government said last month it would provide a 30 percent rebate on tax bills from the fourth quarter of last year onwards for small- and medium-sized firms, defined as those having less than VND10 billion (US$572,000) in capital or employing fewer than 300 workers. It will also cut value-added tax by half in February for products like coal, construction materials, engineering equipment used to make other products and automobile parts. The country would lose around VND1 trillion ($57.3 million) every month if it waives income tax for five months, Tuoi Tre newspaper reported on January 13, citing Deputy Minister of Finance Do Hoang Anh Tuan. Non-resident individuals would not have to pay tax on income from financial investments, transactions, copyright and franchising until May, Monday’s statement said. Source: Bloomberg