It is necessary to review and revise the regulations of the Law on Corporate Income Tax appropriately to ensure the consistency of the legal system. Photo: Internet

It is time to revise the Law on Corporate Income Tax

The Law on CIT was passed on June 3, 2008, at the 3rd session of the 12th National Assembly and took effect from January 1, 2009, to replace the 2003 Law on CIT. Since then, the Law on CIT has undergone two in 2013 and 2014 to solve inadequacies arising in practice and comply with tax management requirements in each period.

According to the Ministry of Finance, since its promulgation, the contents of the Law on CIT and the revised Laws have positively affected many aspects of socio-economic life and met developments of the socialist-oriented market economy. Besides the role of ensuring critical and stable revenue for the State budget and regulating the economy, the CIT policy also plays a vital role in ensuring macroeconomic stability, removing difficulties, encouraging enterprises to expand production and business and exports, boosting investment in priority sectors, fields and areas according to the orientations and strategies of the Party and State in each period.

However, after many years of application in the current domestic and international context, which have many changes, the country’s deepening international integration, the development of the domestic economy, affecting all aspects of the economy, life and society, many forms of e-commerce transactions, investments, and business lines based on digital platforms and new business models have been emerged, which has posed a requirement to review, amend and supplement the provisions of the Law on CIT.

Further, with the current socio-economic development situation and the forecast of future development trends, the CIT policy has also revealed certain limitations that should be improved to promote further the role of CIT, including regulations on tax-free income, taxable income, and principles related to determining deductible and non-deductible expenses and policies on CIT incentives. The fields and areas that enjoy tax incentives in recent years have tended to expand, while some fields that need to be prioritized have not yet had preferential policies (such as tax incentives for small-sized enterprises, start-up enterprises, and science and technology enterprises).

In addition, the Ministry of Finance also said that in recent years, the National Assembly had issued many new laws affecting the content and structure of the Law on CIT, such as the Investment Law 2020 and the Law on Support for Small- and Medium-sized Enterprises. These Laws have contents related to tax incentives for small-sized enterprises, start-up enterprises, science and technology enterprises, etc. Besides, regulations on conditions, the principles of application and the transition of tax incentives are also facing problems, and there is a lack of consistency in the legal system. Therefore, to ensure the consistency and uniformity of the legal system, it is necessary to review and perfect the provisions of the Law on CIT appropriately.

Rearrange policies on tax incentives

The Ministry of Finance recently completed the draft proposal for developing the Bill of the Law on CIT (amended). Accordingly, this Bill is to fully institutionalize the guidelines of the Party and State on reforming the tax policy system by 2030; promptly remove difficulties for production and business activities; accelerate administrative procedure reform, and create resources for socio-economic development. In addition, the Law on CIT (amended) will also ensure the consistency and uniformity of the legal system, comply with the international CIT reform trend, and ensure stable state budget revenue.

The Ministry of Finance said that the contents of the Bill would contribute to creating conditions to promote and support enterprises to expand production and business; review and rearrange policies on tax incentives to encourage and attract investment in priority sectors, fields and areas according to the orientation of the Party and the State. Moreover, it is necessary to offer CIT incentives for small-sized enterprises and encourage business households to transform into enterprises to nurture and create stable revenue.

Notably, in this Bill, the Ministry of Finance will study to expand the tax base; study, amend and supplement several regulations to combat CIT fraud and loss, ensuring State budget revenue. The Ministry of Finance will also amend the inadequacies in the current regulations to ensure the transparency, easy-to-understand and easy-to-implement of the Law; contribute effectively consulting to international tax initiatives and forums.