VCCI has recently submitted formal comments on the draft decree for the Law on Corporate Income Tax (CIT), proposing key adjustments related to supplementary pension funds and foreign loan interest tax rates. These proposals aim to improve both the welfare of employees and Vietnam's investment environment.
Currently, Article 9.2.d of the draft decree allows contributions to voluntary pension insurance funds to be deducted from taxable income, but this is capped at VND3 million (US$113.75) per person per month. VCCI argues that this fixed limit, set in 2017, no longer reflects current economic conditions due to inflation. As a result, the policy has lost its intended power to incentivize businesses to make more substantial contributions to employee pensions.
To address this, VCCI formally recommends replacing the fixed cap with a flexible, percentage-based system. The proposal suggests a limit of 8 percent-10 percent of an employee’s monthly salary. This approach would automatically adjust with income and inflation, providing a more effective and equitable incentive. It would encourage companies to contribute more for higher-salaried employees while ensuring that all workers, including those with lower incomes, still benefit from the policy.
VCCI also expressed concern over the draft's proposal to increase the tax rate on foreign investor loan interest from 5 percent to 10 percent. Businesses fear that doubling this tax rate would significantly reduce Vietnam's appeal as a destination for international investment capital.
Furthermore, it would raise the cost of capital for domestic enterprises, negatively impacting their competitiveness and ability to innovate.
To maintain a stable investment environment and ensure Vietnamese businesses can continue to access foreign capital effectively, VCCI has proposed keeping the tax rate at its current 5 percent. This would signal a commitment to a predictable and favorable business climate.
