Tax break incentive drives firms in Vietnam to list in 2006

Companies in Vietnam are in a rush to list on the country's stock market before the end of this year to take advantage of a tax incentive for firms that list their shares before Jan. 1, 2007, the local newspaper Vietnam News reported Wednesday.

Between 30 and 40 domestic and foreign-invested enterprises are expected to join the stock market this year, including big names like PV Drilling, Tuong An Cooking Oil, Domesco Pharmaceutials, and Masan Trade and Investment Company.

Now, listed companies enjoy a 50-percent reduction in corporate income tax for a period of two years after listing shares on the bourse. The Finance Ministry has recently stipulated that the tax break will be eliminated at the end of this year.

Tax incentives were important during the early years of the stock market, but were not intended to stay in place forever, said Nguyen Thi Lien Hoa, director of the State Securities Commission's Market Development Department.

Hoa said the elimination of tax incentives would increase state budget revenues at a time when some large enterprises were joining the stock market. The removal of tax incentives were also necessary at a time when Vietnam was preparing to join the World Trade Organization and needed to meet commitments with international partners, she said.

Vietnam currently has 49 kinds of listed shares, 371 kinds of listed bonds, mostly government bonds, and one listed investment fund totaling over 65,367 billion Vietnamese dong (more than 4.111 billion U.S. dollars).

Source: Xinhua