Speaking at a review meeting of the financial sector during the first six months of the year held in Hanoi on July 15, Phoc revealed that the Government has implemented the expansionary fiscal policy by offering corporate income tax exemptions and reductions to businesses for the past four years. On average, taxes, fees, charges, and land rental have all been extended and reduced by up to nearly VND200 trillion each year.
However, a tight fiscal policy will be applied, due to start next year, as the country needs to strengthen the capacity of public finance for infrastructure investment such as airports and seaports, as well as social security and salary reform, said the Minister.
Businesses will no longer enjoy corporate income tax incentives from 2025. (Illustration)
In his view, the government will no longer implement the expansionary fiscal policy from next year, but instead focus on removing difficulties faced by firms to support their production and move businesses towards sustainable growth.
Enterprises are still facing difficulties, and the long-term solution is to accelerate the disbursement of public investment in order to boost business production to increase State budget revenue, stated the Minister.
He cited statistics compiled by the State Treasury saying that the disbursement rate in the first six months of the year only reached 28.8%. Procedures for approving investment projects remain complicated, and if shortcomings are not addressed, it will be very difficult to promote economic development.
If public investment remains stagnant, then supporting industries will also face difficulties. Currently, public investment capital in the State Treasury amounts to over VND1 quadrillion. Meanwhile, foreign governments offer ODA loans with an interest rate of 6%, and firms also pay an interest rate of between 10% to 12% each year for bank loans.
This can be considered a big waste which requires management agencies to pay attention to the acceleration of the disbursement of public investment, Phoc analysed.
He also requested closer attention to be paid to real estate, citing statistics which highlight the current national land use tax debt at VND98 trillion. This not only causes losses to budget revenue and a waste of social resources, but also creates conflicts in society, he concluded.
According to the Ministry of Finance, the total State budget revenue in the first six months of the year hit VND1,038.1 trillion, equal to 61% of the estimate, an increase of 17.7% over the same period in 2023. Of the total, domestic revenue reached 60.1% of the estimate, up 19.7%; revenue from crude oil fetched 64.3% of the estimate, down 5.1%; and balanced budget revenue from import-export activities brought in 68.4% of the estimate, up 11.5%.