During its 43rd session on March 10 and 11, the National Assembly (NA) Standing Committee gave opinions on five draft laws, including the amended Law on Product and Goods Quality, the amended Law on Railways, the Law on Personal Data Protection, the Law on State of Emergency, and the Law on Participation in United Nations Peacekeeping Forces.

The Standing Committee also gave opinions on explaining, accepting, and revising three draft laws, including the amended Law on Special Consumption Tax (SCT), the amended Law on Corporate Income Tax, and the Law on Management and Investment of State Capital in Enterprises. These revisions are expected to play a crucial role in shaping tax policies that align with Vietnam’s ambitious goal of achieving double-digit economic growth in the years to come.

Aligning with growth targets

The proposed amendments to the Law on Corporate Income Tax have drawn significant attention, given their potential impact on businesses, the investment climate, and overall economic development. Recognized as highly-complex legislation, it directly affects the corporate sector, production, and the broader socio-economic landscape.

A recent report summarizing key feedback and revisions highlights several areas of consensus between the reviewing and drafting agencies. They agreed to incorporate recommendations from NA deputies on key issues, such as taxable entities, tax exempt income, tax assessment periods, deductible expenses, and tax rules for foreign organizations without a presence in Vietnam.

One of the most debated aspects of the amendment is a proposed provision that would allow real estate businesses to offset profits from property transactions (including project transfers) against losses from other business activities.

This has sparked concerns that such a mechanism could be exploited, enabling companies to minimize their tax obligations on real estate transactions by deliberately offsetting them with losses from unrelated business activities, some of which may be short-lived ventures registered solely for this purpose.

The NA’s Economic and Financial Committee has cautioned that such a provision could significantly reduce corporate income tax revenue from the real estate sector in the years ahead. To prevent potential loopholes and policy abuse, the committee has called for a thorough risk assessment.

During the discussions, Mr. Hoang Thanh Tung, Chairman of the Legal and Judicial Committee, emphasized that the draft law prioritizes corporate income tax incentives over other tax laws. He urged a comprehensive review of Vietnam’s existing legal framework to ensure consistency and clarity in tax policies.

NA Vice Chairman Nguyen Khac Dinh stressed the need for a holistic approach to tax reform. He pointed out that the current draft does not yet account for Vietnam’s economic growth targets of at least 8 per cent in 2025 and double-digit growth in subsequent years, as set by the Party Central Committee and the NA. He called for a reassessment to ensure tax policies effectively support these development goals.

NA Chairman Tran Thanh Man called for close collaboration between the Economic and Financial Committee and the drafting agency to conduct a comprehensive impact assessment, particularly regarding State budget revenue. “Tax policies must strike a balance - driving economic growth, maintaining macro-economic stability, controlling inflation, and ensuring social security,” he emphasized. “A thriving business sector is the backbone of national progress, and any tax reform must carefully consider its impact on State revenue. The goal is to sustain revenue streams, enforce fair and effective tax collection, avoid excessive taxation, and prevent tax evasion through policy loopholes.”

Reassessing excise tax policies

The NA is currently reviewing proposed amendments to the Law on SCT, with Chairman Man emphasizing the significance of these revisions, which have drawn widespread attention from the business community. He stressed that the amendment process must be thorough and well-founded, ensuring effective management while promoting economic growth.

As discussions continue on tax rates for tobacco, alcohol, sugary beverages, pickup trucks, and hybrid vehicles, the Chairman called on the Ministry of Finance and relevant agencies to engage further with ministries, the Vietnam Chamber of Commerce and Industry (VCCI), and business associations. He urged them to gather more data to support the proposed tax adjustments, with findings to be presented at the next NA session. He also requested a detailed assessment of how these tax adjustments would impact production volumes, pricing, and the proportion of tax within retail prices. Additionally, he emphasized the need for concrete evidence on how tax policies would affect consumption, ensuring a data-driven and well-substantiated report for the NA.

Speaking on the broader taxation strategy, he highlighted the importance of balancing public health protection with economic development. Tax policies, he noted, should not hinder normal business operations but instead align with international practices while remaining suitable for Vietnam’s economic conditions.

Several NA deputies expressed opposition to maintaining excise tax on fuel and air conditioners with a capacity below 90,000 BTU. Many argued that these products are no longer considered luxury items but essential household necessities. Standing Vice Chairwoman of the Committee on Petitions and Oversight Le Thi Nga pointed out that applying excise tax to these goods contradicts the tax’s original purpose, which is to target luxury products. She added that concerns over this issue had been raised multiple times in discussions but had yet to be adequately addressed.

Chairman of the Legal and Judicial Committee Hoang Thanh Tung also supported the removal of an excise tax on fuel and air conditioners. He noted that fuel is already subject to various taxes, including environmental protection tax, value added tax (VAT), and import tax, making an additional excise tax redundant. Regarding air conditioners, he pointed out that most households now own one or two units, making it unreasonable to continue taxing them as luxury goods. He called for a careful reassessment of the tax policy to reflect the changing nature of these products in modern households.

In a related development, the NA Standing Committee unanimously approved a government proposal to reduce land rental fees by 30 per cent for 2024, extending the policy implemented in 2023. This move is expected to have minimal impact on State budget revenue while providing significant support for businesses as they recover and expand operations. It is also seen as a key initiative in Vietnam’s broader economic strategy, aiming for at least 8 per cent growth in 2025 and double-digit growth in the following years.