On January 19, the Vietnam Federation of Commerce and Industry (VCCI) provided comments on the proposal to draft a National Assembly Resolution on a regional and international financial center in Vietnam.
VCCI mentioned two major issues. One is the subjects registering for membership in the Center. The draft stipulates that the subjects eligible to register for membership in the Financial Center are credit institutions, financial companies, stock exchanges, gold, foreign currencies, financial investment funds, investment funds, insurance companies, etc.
These are businesses that provide financial services. However, the draft does not mention large financial service customers such as corporations, parent companies, and holding companies. This leads to the question of whether non-financial businesses are allowed to register as members of the Financial Center.
VCCI said that, referring to the experience of some other financial centers in the world that also have membership registration regulations, the subjects allowed to participate are clearly divided into two groups, financial enterprises and non-financial enterprises.
Regarding corporate income tax on investment activities for innovation and creativity, section 2.3.6 of the new draft only focuses on exemptions and reductions of this tax. However, according to many startups, current regulations on corporate income tax are hindering capital flows into this market.
For example, consider a venture capital firm that invests in startups. It invests in many innovative startups. These startups often have a low success rate, but if they do, they can generate large profits because the value of their capital contribution can increase many times over. When the venture capital firm sells its capital contribution to a successful startup, it has revenue subject to corporate income tax.
However, the cost invested in failed startups cannot be deducted when determining tax liability due to the principle that costs must correspond to revenue according to the law on corporate income tax.
Therefore, VCCI recommends that the drafting agency supplement policies regulating tax mechanisms suitable for businesses registering venture investment activities at the Financial Center.
