Business licence fees may triple

For instance, businesses with registered capital of between VND10 billion (US$447,828) and under VND100 billion will have to pay a fee of VND5 million per year, while those with over VND100 billion will be regarded as large businesses and would have to pay a business licence fee of VND10 million per year.

Businesses with charter capital of under VND10 billion will pay VND3 million per year.

Business households and individuals with an annual turnover of over VND300 million will have to pay VND1 million per year. Those earning between VND100 million and under VND300 million per year will have to pay VND300,000.

Business households and individuals with an annual turnover of below VND100 million will be exempt from paying this fee.

To encourage fishermen to hold onto their sea-based business, the ministry proposed an exemption for salt-making households, fisheries and aquaculture households and fishery logistics service providers.

If the draft decree is approved by the Prime Minister, it will replace the current business licence tax from January 1, 2017, when the new Law on Charges and Fees takes effect.

Under the new decree, it will be called a fee rather than a tax.

Currently, the State budget’s annual revenue from business licence tax is around VND1.7 trillion (US$75.5 million). Once the draft decree is enacted, the ministry expects to collect some VND2.7 trillion (US$120 million) per year.

Speaking at a press conference held by the Finance Ministry in Hanoi on March 31, Deputy Minister Vu Thi Mai said the current decree was outdated as it was issued in 2002, when the minimum salary was VND290,000 per month. Meanwhile, the current minimum salary is VND1.15 million, which will be raised to VND1.21 million in the future.

"The new decree does not originate from the State budget’s difficulties. It’s intended to match the business situation of the last 14 years," she said.

"The business licence tax was based on the minimum salary level. Therefore, the current tax level is not suitable for the increased minimum salary," she said.

Mai said the ministry is gathering ideas from other ministries, sectors and localities to revise other unreasonable issues or to provide an explanation for them.

The draft decree was made public on March 25. The ministry will complete it and submit it to the Government in July.

It is expected to go into effect on January 1, 2017.