Tax relaxation booster for businesses

The money saved from extension of land rent and corporate income tax enables Quang Khoe Woodworking Cooperative to turn over capital

Covid-19 and unpredictable fluctuations of the world economy have made businesses face many difficulties since 2020.

The Government consecutively issued decrees 41 in 2020, 52 in 2021, 34 in 2022, and 12 in 2023, which is effective from April 14 to December 31, 2023, on extending the payment of taxes and land rent to support enterprises.

As soon as Decree 12 was promulgated, the Taxation Department of Hai Duong province intensified propaganda, focusing on beneficiaries of tax extension, tax extension time, as well as the process of applying for tax extension.

“We predict that hundreds of billion VND saved from tax exemption, reduction, and extension policies in 2023 will contribute to helping businesses and people with economic development,” said Vu Doan Ngoc Hung, Head of the Propaganda and Taxpayer Support Division under the provincial Taxation Department.

Quang Khoe Woodworking Cooperative in Thanh Binh ward, Hai Duong city, has operated moderately for nearly a year. 

“Our cooperative’s revenue plummeted in the 1st quarter of 2023, equivalent to only 60% of the 1st quarter in 2022 and even down nearly 70% compared to the peak period of the 1st quarter in 2020,” said cooperative director Le Quang Khoe.

The cooperative had to borrow working capital from banks to fill existing orders and withstand the market downturn.

“We have to pay the banks’ interest and employees more than 120 million VND each month,” Khoe added.

Entitled to extension of land rent and corporate income tax, the cooperative now has short-term resources equivalent to the above amount, contributing to offering it more time to sell inventory, valued at over 10 billion VND, and expand markets in the coming time.

Tax exemption and reduction policies are expected to help businesses stabilize production and business in the short term. In the photo: The Accounting Department of Phuc Lien Business and Trading Private Enterprise balances and supplements capital for partners from extended taxes

Hai Duong Garment JSC. No. 2 mainly operates in the field of garment processing for export, thus being affected to a certain extent by fluctuations of the world economy.

Its revenue in the 1st quarter of 2023 fell by nearly 10% year on year because of decrease in market demand, according to chief accountant Tran Van Quang.

The company has to pay a rent of 500 million VND each year for about 23,000 m2 of workshops. A six-month extension for half of this year's land rent enables the firm to pay interest on bank loans.

“At least we will have more time to seek new orders,” said Quang.

Le Thi Diu, Chief Accountant of Phuc Lien Business and Trading Private Enterprise in Cam Thuong ward, Hai Duong city, said that all decrees have brought practical benefits for her company.

The enterprise cooperates with Binh Bao Minh Co., Ltd. to distribute VinFast cars in Hai Duong. Economic difficulties have caused revenue from both electric motorbikes and electric cars to decrease.

“Our company can supplement business capital for partners with the land rent extended this year, somewhat reducing difficulties in financial balance,” said Diu.

The above tax policies are expected to help businesses promptly stabilize production and business in the short term and carry out market expansion plans as a premise for medium- and long-term growth.

HA KIEN