Comprehensive solution needed to support loss-making enterprises

In 2022, many enterprises in the real estate, securities, steel, and aviation industries suffered losses from a few hundred to a thousand billion Vietnamese dong due to difficulties. Statistics of financial data provider Fiin Group showed that in the fourth quarter of 2022, there were about 251 loss-making enterprises out of a total of about 1,000 enterprises that published financial statements. The loss-making enterprises also caused the amount of deferred tax to constantly increase over the years and reach nearly VND135 trillion (US$5.75 billion), accounting for 9.2% of the total budget revenue in 2022.

The Ministry of Finance said the penalty on late tax payment in 2022 increased compared to previous years as a result of the COVID-19 pandemic. The volatile prices of oil and input materials affected most economic sectors, which caused many difficulties for taxpayers in production and business. The taxpayers made loss and owed tax so the tax payment penalty increased.

Under the current regulations, taxpayers are charged a late tax payment penalty of 0.03% per day of their total tax liability. According to calculations by the Ministry of Finance, the proposed exemption of late tax payment penalty can reduce the State budget revenue by about VND2.5 trillion.

To support enterprises, the Ministry of Finance has also proposed reduction of 36 fees and charges in many economic sectors by 50% from July 1 this year.

Mac Quoc Anh, deputy chairman and general secretary of the Hanoi Association of Small and Medium Enterprises, said enterprises made a loss and could no longer pay their tax liability. If they are not exempt, enterprises will have their tax liability suspended, affecting their reputation when signing cooperation deals.

In order to support enterprises through the difficult times, Anh suggested the Government speed up the disbursement of public investment capital to push money into the economy, besides freezing previous debts and bad debts. Along with that, enterprises want banks to reduce interest rates on loans from the end of 2022 that are bearing high interest rates.

Can Van Luc, chief economist of the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), said financial difficulties and cash flow disruption are biggest challenges enterprises have to face. The ability to absorb capital of enterprises and the economy is currently very low. In the first five months of 2023, credit growth was about 3%, much lower than the same period last year. The channel to raise capital from the stock and corporate bond markets is still narrow. Disbursement of public investment is still slow with many localities having not met the requirements.

In the past three months, a series of Government decisions related to healthcare, land, real estate, construction, finance, credit, import and export have been implemented. Though many incentive policies and supporting packages for enterprises have been issued, they have not been really effective in practice, said Luc.

Luc suggested the Government focus on removing difficulties that are hindering enterprises, such as regulations related to fire prevention, visas for tourists and experts, and VAT refund.

Besides, competent authorities should completely resolve violations of securities and real estate.

All of the works need to be assigned with specific deadlines and strict sanctions should be imposed if they are not implemented, Luc said.

According to representatives of enterprises, along with the extension and exemption of late tax payment penalty, the Ministry of Finance needs to have specific policies to revive enterprises in the long term, such as sharply reducing corporate income tax, exempting and reducing taxes and fees paid for administrative procedures and services.