The government has proposed to the National Assembly to cut corporate income tax rates from 25% to 22%.

The government made the proposal at a National Assembly Standing Committee meeting on April 16.

Earlier, it recommended a reduction to 23%.

The current 25% tax rate is forecast to result in a reduction in the budget of VND1.43 trillion (USD68.1 million) this year. The tax of 25% has been imposed since 2008 following being slashed from 28%.

The government has also recommended applying a flat rate of 20% on corporate income tax for small and medium-sized enterprises, said Deputy Minister of Finance Vu Thi Mai. She added that growth in this sector would be good for the state budget.

By January 1, 2016, the common corporate tax for all enterprises is expected to stand at just 20%.

Phung Quoc Hien, Chairman of the National Assembly Finance and Budget Committee, however, added to a number of concerns about the possible impacts of lowering the rate, saying, "These new tax policies could lead to a drop of VND2.65 trillion (USD126 million) in state revenue."