NA deputies propose removing spending cap on corporate advertising
The NA has recently held a working session to discuss the draft amended Law on Corporate Income Tax which suggests an increase in the cap to 15%. However, a number of NA deputies disagreed for various reasons.
Deputy Truong Trong Nghia, from HCM City, said lawmakers should remove the cap because, while 10% or 15% may be a reasonable amount for larger companies, smaller ones may have to spend from 20%-40% of their budgets on advertising.
Deputy Nguyen Ngoc Hoa, also from HCM City, agreed, saying that any enterprises often make careful consideration before deciding how much to spend on advertising. He added that companies should be empowered to decide on their own the best amount to spend on advertising and how best to balance their expenses.
Some deputies suggested calculating the cap based on the revenues of enterprises instead of on their total expenses as is done currently in order to ensure transparency.
“Corporate advertising and promotion programmes have fostered the development of the advertising industry which has contributed to the state budget as it is subject to several types of taxes, including corporate income taxe,” Hoa commented.
Sharing the same view, deputy Nguyen Thi Nguyet Huong, from Hanoi said even though the proposed increase in the cap from current 10% to 15% is a positive move, the cap has unwittingly hindered sales.
“We do suggest removing the cap. If we have no better choices and are compelled to continue to apply a cap, the regulation should be amended in accordance with international norms,” said deputy Pham Huy Hung from Hanoi.
Deputy Tran Quang Chieu, from Nam Dinh Province, said the proposed cap at 15% is unreasonable, as it may be sustainable for foreign companies but several small domestic firms may not be able to spend that much.
Meanwhile, Deputy Prime Minister, Vu Van Ninh, said the removal of the cap has the potential to create favourable conditions for foreign companies to take advantage and increase the prices of their goods and services.
A recent survey by the NA’s Committee for Finance and Budget showed that the majority of members of the committee supported the increase in the cap to 15%. They also proposed supplementing the draft law with a roadmap towards the eventual removal of the cap in accordance with international regulations so as to attract investment.