Smarter tax policies needed for the development of Vietnamese tech companies

At the recent national forum on developing Vietnamese technology firms, some experts suggested regulators apply more proper tax policies and create more incentives for the development of domestic tech companies.

Smarter tax policies for tech companies

According to Nguyen Xuan Thanh, an expert in public policy from Fulbright University Vietnam, technology enterprises are the core group than can help boost Vietnam’s economy rapidly as it grows 2.5 times faster than GDP.

In addition to the idea of developing a cluster of innovative enterprises as well as improving the workforce’s qualifications, infrastructure and promoting the participation of venture capital funds, Thanh put the spotlight on the financial factor.

He stressed that it is not advisable that the government constantly pour money into start-up companies, but it should rather offer assistance through tax incentives.

For instance, the government should reduce the personal income tax for IT engineers or to offer tax incentives for human resources of research and development (R&D) companies.

However, for a domestic company to prove itself eligible for tax incentives it is an arduous task.

“On the contrary, the procedures for foreigners or FDI firm workers are faster and better. Therefore, we should consider regulating smarter tax policies for domestic enterprises,” Thanh said.

More incentives for higher values

Sharing the same idea, VCCorp General Director Nguyen The Tan said that the tax policy for Vietnamese creative technology companies is less favorable compared to outsourcing companies or cross-border technology companies.

He cited China and the US where the creative technology firms are entitled to generous tax incentives.

“Meanwhile in Vietnam, the tax rates applied for domestic technology firms are ranging from 15% to 20% of the revenue instead of 15% to 20% of the profits like other countries,” Tan said.

He expressed his concern when Vietnamese social networks cannot hire content producers due to state regulations concerning private press, while Facebook and YouTube can post contents made in Vietnam without restrictions.

According to Tan, many Vietnamese enterprises aware of the problems but cannot solve them with their available technologies due to the policy barriers.

He suggested the regulators categorize technology enterprises in different groups, aiming to give priority to the group of businesses that create more value and setting tax policies based on priority level.

He elaborated that tax policies should be used as protective tools for the development of enterprises.