Tax cuts: A 'tonic' to boost businesses.

Tax reduction policies that support and stimulate both "input and output" are of great significance to businesses.

The VAT reduction policy helps businesses sell more goods, thereby expanding production and creating more jobs - Photo: NGUYEN KHANH

A businessman who owns a handicraft production facility in Thach That district ( Hanoi ) specializing in exporting handcrafted wooden products to the European Union market shared that since the end of 2023, orders have decreased by nearly 50% due to inflation in Europe and stricter requirements for verifying the origin of raw materials.

Although profitable, the profit margin is very low (below 3%), so this businessman believes that if the corporate income tax rate remains at 20%, the profit will be almost zero. Meanwhile, the new tax incentive could help the business retain over 300 million VND, enough to pay workers' salaries and maintain subsequent orders.

A small-scale catering company in Cau Giay district (Hanoi) revealed that its operations have been severely affected by the trend of tightening spending while raw material prices increase, customer numbers decrease, and rental costs rise.

Therefore, the 2% VAT reduction helps lower menu costs and retain customers. Although the VAT reduction is small, it is extremely significant as it helps businesses overcome the low season and avoid closure.

Or consider a tech startup that provides integrated enterprise resource planning (ERP) solutions for small and medium-sized enterprises (SMEs) and has been operating for three years but is still not profitable.

This company also faces difficulties in accessing tax incentives because it does not meet the criteria for being a "high-tech enterprise".

Therefore, businesses are hoping for a more clearly defined corporate income tax incentive policy for technology companies, which would help reduce taxes and alleviate cash flow pressure.

It's safe to say that the business community across many industries and sectors is eagerly awaiting tax reductions.

Therefore, the VAT policy passed by the National Assembly on June 17th, with a 2% reduction and expanded coverage to many more products and services, served as a timely "boost."

Along with the new policies in the previous Corporate Income Tax Law, which offered tax exemptions and reductions of 10% - 17% for many sectors, these measures were enthusiastically welcomed by the business community.

According to data from the General Statistics Office, in the first five months of 2025, over 111,600 businesses withdrew from the market, an increase of more than 14.4%.

In Hanoi alone, more than 5,000 businesses have ceased operations, mainly concentrated in the trade, manufacturing, and civil construction sectors.

A number of businesses are facing major challenges such as trade and geopolitical tensions, with the US-China trade war still ongoing, conflicts in various regions like Russia-Ukraine or the Middle East causing supply chain disruptions, and volatile raw material prices.

Therefore, while reducing corporate income tax helps support input factors, giving businesses more resources for investment or restarting production and "re-establishing" businesses, reducing VAT helps stimulate output, giving businesses' products and goods a competitive advantage and bringing them closer to consumers.

Tax reduction policies that support and stimulate both "input and output" are therefore all the more significant for businesses.

To ensure that incentives reach businesses sooner, the next step is to simplify the procedures for accessing tax incentives, especially for startups, innovative businesses, and those undergoing digital transformation.

Strengthening the role of local business associations in reflecting practices and proposing more realistic policy recommendations is necessary, along with the need for annual public monitoring reports on the extent to which businesses access incentives, investment efficiency, and the rate of profit reuse for reinvestment.

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MAC QUOC ANH (PERMANENT VICE CHAIRMAN OF THE HANOI ASSOCIATION OF SMALL AND MEDIUM ENTERPRISES) - NGOC AN

Source: https://tuoitre.vn/giam-thue-lieu-thuoc-tiep-suc-doanh-nghiep-20250618075453338.htm