VINACHEM

Micro-finance institutions are likely to be exempted from corporate income tax for two years, according to a circular drafted by the Ministry of Finance (MoF).

Micro-finance institutions mainly provide banking services to individuals and households with low income as well as super small businesses.

Under the draft, micro-finance institutions licensed by the State Bank of Viet Nam prior to January 1, 2014 under the Law of the Credit Institutions, would qualify for the tax break.

After the two years of tax exemption, the institutions would also enjoy a 50 per cent income tax reduction over the next four years on revenues derived from micro-finance activities.

The length of the tax exemption or reduction would be calculated from the first year the micro-finance institutions had earned taxable income.

Tax breaks for other micro-finance institutions would be 20 per cent, but the rate would drop to 17 per cent from January 1, 2016.