VCCI recommends 50% VAT, corporate income tax cuts for typhoon hit firms

Typhoon Yagi relief should include exemptions or 50% cuts in value-added tax, corporate and personal income taxes to affected businesses and taxpayers for 4-6 months, says the Vietnam Chamber of Commerce and Industry (VCCI).

The VCCI made its recommendation in a report sent to the prime minister that addressed damages inflicted by the severe typhoon.

Citing extensive damage, the report said most firms in the northern region were forced to temporarily close, halt production or reduce operations due to the typhoon and subsequent flooding.

Enterprises were facing significant challenges in restoring business operations, which is impacting economic growth as well as the livelihoods of workers, the report said, stressing the urgent need for policies to support them.

The VCCI also suggested that the government reduces or defers social insurance and union dues for 4-6 months.

In other recommendations, it said VAT on gasoline and electricity could be lowered, deadlines extended for tax and land rent payments until 2025, and debt repayment deadlines for businesses extended until June 2025.

The government should also provide financial support to aquaculture firms and cruise/fishing vessel operators and exempt water surface rentals for aquaculture farms until end-2025, the VCCI said.

It suggested port entry and anchorage fees for fishing and cruise ships should be either reduced or waived for six months to one year. Additionally, the state can cover 50% to 70% of insurance costs through the end of 2025.

It called for measures to revive the local agricultural sector and expanded support for agribusinesses affected by the natural disaster.

The VCCI also proposed utilizing the natural disaster prevention and control fund, which currently holds VND2 trillion ($81.28 million), to address the typhoon’s aftermath.

Typhoon Yagi, the strongest in Asia this year, had cost Vietnam an estimated VND50 trillion ($2 billion) as of September 19, Deputy Minister of Agriculture and Rural Development Nguyen Hoang Hiep said at a conference the same day. He predicted that the total economic damage could amount to $2.5 billion.

The losses inflicted by the storm and its aftermath are projected to reduce Vietnam’s GDP growth by 0.15 percentage points, bringing it below previous forecasts of 6-8.7%. The growth rates in northern localities like Hai Phong city, Quang Ninh, Thai Nguyen and Lao Cai provinces may drop by more than 0.5 percentage points, Hiep said.