Sir, how do you evaluate the 46% US tax rate applied to 90% of Vietnamese goods?
- This tax rate is too high and surprising for Vietnamese enterprises. The US imposes counterpart tariffs of up to 46% on 90% of total imported goods from Vietnam to the US, not only causing difficulties for exporting businesses but also significantly affecting Vietnam's economy.
High tax rates will increase costs for Vietnamese exporting enterprises, especially in fields such as agriculture, aquaculture, wood, textiles, footwear and electronics, etc., which are key industries in export to the US market. Many businesses may face the risk of falling orders due to rising costs, leading to reduced competitiveness in the US market. When production costs increase, the profits of enterprises will also be affected, which can lead to production shortages, thereby cutting down on labor.
In addition, the new tax rate also poses a big challenge in attracting foreign investment. Investors may be hesitant when deciding to invest in industries sensitive to tariffs in Vietnam. In the context of increasingly fierce global competition, the loss of investment capital will reduce the ability of the economy to develop sustainably.
How should Vietnam respond quickly to this new US tax policy, sir?
- What we need to do quickly is hold bilateral negotiations with the US side so that they can reconsider the tax rate. It is necessary to prove that Vietnam does not have unfair trade with specific evidence. In fact, Vietnam has also had good diplomatic steps in recent times when affirming goodwill through many preferential policies for US businesses and investors. This is the foundation for Vietnam to urgently conduct negotiations so that the US can reconsider the tax rate.
For domestic enterprises, the Government needs to quickly provide support packages for enterprises to adapt to the impact of US tax rates. For example, reducing taxes and fees for exporting enterprises to partially offset the impact of US taxes. Support credit for small and medium-sized enterprises so that they have capital to maintain operations during difficult times, especially those associated with direct or indirect exports.
Regarding financial support policies, it is possible to immediately build a credit incentive package of about a few hundred trillion VND for affected export enterprises. Reduce pressure on businesses by extending the repayment period for bank debts for businesses with reduced orders.
In addition, increase credit guarantee limits through development banks, state-owned enterprise development support funds, and credit guarantee funds, so that small and medium-sized enterprises in the export sector can easily access capital. For businesses that are heavily affected, they can get a 50% reduction in corporate income tax this year pending negotiations with the Government. However, it is necessary to develop specific criteria for affected export enterprises.
In particular, speed up the VAT refund process for businesses, especially export businesses. Shortening tax refund time contributes to helping businesses increase mobile cash flow.
In the long term, we need to take advantage of free trade agreements (FTAs) signed with many countries so that businesses can expand export markets. Encourage businesses to shift to the EU, Japan, South Korea, etc. to reduce their dependence on the US market as much as they are now. The Ministry of Industry and Trade can support the costs of attending international fairs and exhibitions in markets and countries where we have signed FTAs to connect businesses with foreign partners.
We also need a specific program to build a Vietnamese national brand, enhance the recognition of Vietnamese products in the international market to help businesses easily access new markets.
What recommendations do you have for current exporting enterprises, especially for industries subject to high taxes such as seafood, wood, and textile?
- Enterprises need to proactively cooperate and work with State agencies to receive timely support on information related to tax policies, possible incentives or other support measures that the Government may provide.
One of the effective ways to reduce the impact of taxes is to improve product quality and increase added value. Enterprises need to seek opportunities to participate in free trade agreements to expand the market and reduce the applicable tax rate. This is not just an option but a must to survive.
To increase competitiveness and reduce production costs, businesses need to apply modern technology and automation in the production process. This not only helps save costs but also improves productivity, thereby minimizing the impact of the new tax rate.
However, saying that does not mean businesses giving up the US market because this is a large-scale and potential market. Businesses should find many ways to approach this market. For example, digital transformation and e-commerce will be tools for businesses to approach and directly attract customers from the US and other countries. Focus on investing in green, clean products to enhance the value of your commodity products. This is a trend in which all countries, including the US, increasingly have to prioritize products with green certificates that meet ESG standards.
The problem now for businesses is not how to change them but how to think to adapt and take advantage of opportunities from this difficult and challenging US "tax system" for development.
Thank you!
