The Vietnam Chairman of Commerce and Industry (VCCI) has just made some suggestions regarding taxes for innovative start-up businesses

VCCI has just commented on the proposal to build a National Assembly Resolution on a regional and international financial center in Vietnam

Specifically, regarding corporate income tax on investment activities for innovation and creativity, section 2.3.6 of the new draft only focuses on exemptions and reductions of this type of tax. However, according to the reflection of many startups, the regulations on corporate income tax are currently hindering the flow of capital into this market.

For example, in the case of a business specializing in venture capital for startups. This business contributes capital to many innovative businesses (startups).

These startups often have a low success rate, but if successful, they bring in large profits because the value of the contributed capital can increase many times. When the venture capital business sells its capital contribution in a successful startup and has revenue subject to corporate income tax.

However, the cost of investing in failed startups cannot be deducted when determining tax liability due to the principle that costs must correspond to revenue according to the law on corporate income tax.

Therefore, VCCI recommends that the drafting agency supplement the policy on tax mechanisms suitable for enterprises registering venture investment activities at the Financial Center.

According to many startups, the current regulations on corporate income tax are hindering the flow of capital into this market.

In addition, VCCI also sent a document to the Ministry of Planning and Investment regarding comments on the proposal to develop a National Assembly Resolution on the Regional and International Financial Center in Vietnam.

According to VCCI, the Draft stipulates that the subjects eligible to register as members of the Financial Center are credit institutions, financial companies, stock exchanges, gold, foreign currencies, financial investment funds, investment funds, insurance companies, etc.

These are businesses providing financial services. However, according to VCCI, the Draft has not mentioned large financial service customers such as corporations, parent companies, and holding companies. This raises the question of whether non-financial businesses are allowed to register as members of the Financial Center or not?

VCCI said that, referring to the experience of some other financial centers in the world that also have membership registration regulations, the subjects allowed to participate are divided into two clear groups, financial enterprises and non-financial enterprises.