Vietnam’s legislature today voted to reduce the corporate income tax rate in an attempt to bolster businesses and encourage investment to revive the economy.
The tax rate will be cut to 22 percent from 25 percent starting Jan. 1, 2014, and to 20 percent from Jan. 1, 2016, said National Assembly Vice Chairwoman Nguyen Thi Kim Ngan. The rate for companies with fewer than 200 employees and total revenue of less than 20 billion dong ($950,887) will be lowered to 20 percent from July 1, 2013 and to 17 percent from Jan. 1, 2016.
The cuts, while affecting the state’s budget, will “ensure the competitiveness of Vietnam’s businesses and attract foreign investment,” Ngan said in a statement. She said 91.6 percent of lawmakers voted in favor of the reduction in the tax rate.
The government is trying to spur economic growth that last year was the least since 1999 after rising levels of bad debt at lenders crimped credit to businesses. The State Bank of Vietnam last month cut policy interest rates, the eighth such reduction since the start of 2012, to support expansion.
Vietnam is aiming for economic growth of 5.5 percent in 2013, in what would be its first period of three straight years of expansion below 6 percent since 1988, according to International Monetary Fund data.
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