Controlling advertisement cost means roping businesses’ hands

5/31/2013 12:00:00 AM


“Creating the limit for spending advertisement cost is not a good way but it also ropes businesses’ hands in competition. I suggest to cut down the controlled rate on advertisement and promotion cost right in this time of correction.” Representative Mai Huu Tin suggested.

In the morning of May 29th, Parliament discussed about the project of correcting and adding more clauses for the Law of business income tax. One of the points that most members of Parliament paid attention to and contributed for the draft was the increase of controlled rate on advertisement, promotion, percentage and brokerage cost from 10% to 15%.

Agreeing with the draft but representative of Kien Giang Ms Nguyen Thi Be suggested that the law-maker office should define the route to cutting down the above controlled rate to be appropriate to international routine. Besides, the law draft should define the controlled rate that was eliminated according to percent rate on turnover instead of that of on total cost defined in the draft to refuse the complication in calculating and to ensure the clearness. Also according to Ms Be, law-maker office should add more rule about the controlled rate on particular business lines, exclusive products, no need to spend for advertisement activities on electricity, petrol, fresh water.

“The common regulation of the controlled rate on advertisemnent cost of exclusive products with business lines having the competition will not ensure the fairness” Ms Be pressed.

Also agree with the draft of increasing the ceiling of controlled rate for advertisement up to 15% but a representative of Lam Dong Mr Nguyen Ba Thuyen thought that it was not sensible for the groups of big businesses and medium-and-small businesses. “I suggest to correct according to percent rate that we operate and trade, % according to turnover, calculating percent rate. These ways are more sensible. If we fix at 15% then small and medium businesses will not have enough cost.

Representative of Binh Duong Mr Mai Huu Tin thought: “Increasing the controlled rate from 10% to 15% according to the draft is an advantage, after lots of complaints from businesses since the appearance of the law of business income tax. I don’t think that cutting down the controlled rate will make decrease the source of business income tax into the budget. Businesses have to pay for these costs to survive, to competition, to increase the market share and increase their own profit. They have no reason to pay money more to make their profit decrease in order to decrease the business income tax that they have to pay. In reality just businesses in retail have to pay at high rate while most others don’t have to pay much.”

Therefore, according to this representative, setting the limit for spending rate while most countries in the world don’t apply “is not a good way but it also ropes businesses’ hands in competition instead of supporting them. I suggest to cut down totally the controlled rate on advertisement and promotion cost right in this time of correction”.

Agreeing with the opinion of cutting down the controlled rate on advertisement and promotion cost, representaive of Tien Giang Mr Tran Van Tan thought: Setting the fixed controlled rate like the draft puts small and medium busineses in a disadvantage. Because their sizes are small so with the maximum spending rate even up to 15% then their total spending rate will be very small. It’s hard for small and medium businesses to build their brand names.

Therefore, “to ensure the fairness among businesses, I suggest the law draft defined according to the way of controlled rate being eliminated not over 15% on the total turnover of businesses. I also suggest to totally cut down the above controlled rate to be appropriate to international routine, to make an attractive environment for investment” Mr Tan said.

According to representative of Ha Nam Mr Phung Duc Tien, law draft makers should not control the ceiling advertisemnet cost being eliminated when calculating business income tax, but they can set up soft regulations that define that businesses are just calculated to reduce 50% total extra advertisement cost not depending on total income tax cost being eliminated or can allow businesses to eliminate 15-20% total turnover from manufacturing and trading services of financial year.

The real extra cost can be calculated in the year after. This allows businesses to be able to decide their budget for advertisement cost depending on business goals to build brand names, and to create the competitive power on the market.

“Need to reduce the advertisement cost according to rules, avoiding to level all, but considering feature of each group of industry and advertisement time. According to this spirit we should identify the rate of reducing advertisement cost in taxed income according to industrial feature of businesses. Besides, need to reduce eliminated advertisement cost in order to prevent over spending on products that can be harmful to human health such as wine, tobaco, etc”, the representative contributed.

Through the process of studying the law draft, representative of Thai Binh Mr Do Van Ve thought that we didn’t need to control according to percent rate (10% or 15%) on the cost for broadcasting products, building brand names. According to him, if controlling the percent rate like that it is not only complicated, it also makes businesses face with difficulties in their work of broadcasting brand names; while FDI businesses, foreign companies who sell products into our market have strong potentials, great brand names and great sources from foreign mother companies supporting them to dominate the market of our domestic businesses.

By chance Vietnamese businesses can fail right in their home yard just because of these rules, this still doesn’t mention the case when our businesses have to broadcast and rise out foreign markets while needed to keep the controlled rate on advertisemnet cost to protect domestic businesses then the sensible percent rate rules on turnover”, he pressed.


According to Nguyen Hien (Dan Tri)

Translator: TM (Unigroup)

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