The Vietnamese Government helps!
The Prime Minister of Vietnam has issued a special Directive 11 to announce a number of measures to help businesses affected by Covid-19.
The Vietnamese Government has announced such measures as tax breaks, delaying tax payments, and land-use fees for businesses, in total involving US$1.16 billion (VND 27 trillion). In addition, the interest rates as of February 2020 are being cut by Vietnam’s central bank, State Bank of Vietnam (SVB).
Due to COVID-19, a lot of Vietnamese businesses will experience a slowdown or even will have to stop their work. Especially the manufacturing sector will be hard hit due to a shortage of raw materials. But there will also be a slowdown on the demand side.
Highlights of Directive 11
- Delaying of tax payments: companies affected by COVID-19 can apply to extend the deadline for paying taxes and get an exemption for paying penalties for paying late taxes.
- VAT: companies can delay payment of Value Added Taxes by five months.
- Individuals: individuals and business households can delay VAT and Personal Income Tax to 15 December 2020.
- Loans:the SBV has urged other banks to simplify administrative procedures, shorten the time for loan approvals, increase accessibility to bank loans, reschedule debt repayments, consider interest rate exemption/reduction and reduce bank fees.
- Land-use fees: The government is also planning to delay land-use fees until October 31, 2020.
- Social premiums: Vietnam Social Security agencies have announced to postpone the collection of social insurance premiums until June or December 2020 without charging late payment interest.
- Interest rate cuts: SBV has cut interest rates by 0.5-1 percentage points and to scrap transaction fees and they also ordered commercial banks in the country to follow suit
- Preferential credit: SBV has offered US$12.4 billion (VND 293 trillion) in preferential credit to affected businesses.
- Price control: all local authorities are urged to reduce charges and fees for those affected by the Covid-19 outbreak. Moreover, they are demanded to not increase prices in the first and second quarters of 2020 for goods that are inputs for manufacturing which prices are managed/fixed by the government.
- Customs: The customs authorities should simplify clearances including difficulties faced by importers and exporters.
- Support and training: the Ministry of Labor, War Invalids and Social Affairs will draw up plans to support labor training and support employees that lost jobs due to the epidemic.
- Supply: the Ministry of Industry and Trade (MOIT) is to ensure the supply of raw materials for manufacturing/business. MOT has to organize production, distribution, circulation and the supply of goods to meet consumer demands. It has to consolidate the domestic market and support retail trading activities. Moreover, MOIT must also take measures to boost exports, improve the effectiveness of trade promotion, diversify and find new import and export markets and actively exploit opportunities under FTAs.
Further incentives by local governments and ministries are likely to be introduced in compliance of Directive 11. We will inform you when they are issued.