To assist troubled enterprises, the Hanoi Tax Department said it will cut VND5,105 billion (USD245 million) of taxes for small and medium-scale enterprises.

Hanoi Tax Department will subsidise VND5,000 billion in tax

Enterprises have encountered many difficulties in the first five months of the year because of rising fuel costs and the markets slump. Despite the city's support measures, the situation shows no signs of improving.

The number of new enterprises established in the first quarter of 2012 decreased 15% compared to the same time last year. In addition, 7,754 enterprises shut down in the first five months this year, 68% of the total number of enterprises that declared bankruptcy in 2011. Meanwhile those temporarily suspending operations in the early 2012 equalled 26% of 2011’s figures.

The Hanoi Tax Department said it would cut VND5,105 billion in taxes including VND150 billion (USD7.2 million) in land rental fee and VND500 billion (USD24 million) in VAT cut this June for small and medium-scale enterprises.

The total outstanding debt for April was estimated at VND6,049 billion (USD289 million) with construction firms still owing VND2 trillion in tax (USD69 million).

The Hanoi Tax Department said about 70,000 small and medium-scale enterprises will be entitled to preferential tax policies. It will further exempt taxes or push back the deadlines to create favourable conditions for many businesses but it will give lay down strict sanctions to those attempting to profiteer from the tax cut.

To keep the state budget healthy, the department will tighten control over the real estate market to collect taxes owed in the last six months of 2012. It will also map out plans to prevent tax losses from commercial and services businesses.