Experts called for the corporate income tax (CIT) to be cut from 25 percent to 20 percent as soon as next year to help enterprises overcome the economic downturn and accelerate production.

Workers of Nam Dinh Forestry Co produce wood products. — VNA/VNS Photo Danh Lam

The current rate of 25 per cent was higher than other countries in the region, President of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc said.

Thailand recently cut its CIT from 30 per cent to 23 percent, while those of Japan, South Korea and Taiwan hovered around 15-17 percent only on small and medium ones.

Loc also disputed the contention that tax cuts would not help troubled enterprises because these firms were struggling to turn a profit, so they would have no income to be taxed anyway. "The tax rate of 20 percent is reasonable," he said, making the case that the tax cut would offer a chance to many enterprises to increase their investments and create jobs.

According to a recent survey conducted by VCCI, 30 percent of small- and medium-sized enterprises had closed down, and the rest were deep in difficulty. Loc said that the fact they had survived at all could be attributed to capital they had accumulated over previous years.

It was estimated that 50,000 enterprises would shut down this year. In the last two years, about 100,000 have closed - equal to half of the total closings since the Law on Enterprises was passed 20 years ago. "The situation is really alarming," Loc said.

He predicted that enterprises would continue to encounter difficulty for one or two years, while the public investment remained tight, access to credit and foreign capital mobilisation continued to be difficult and the prospects of the stock market were still dim.

The VCCI also proposed reducing the land tax and creating measures to increase salaries and improve enterprises' access to credit.