Under the proposed changes to the law, small- and medium-sized enterprises (SMEs) with earnings of less than VND20 billion and a workforce of fewer than 200 workers would enjoyed an even lower rate of 20 per cent.

SMEs account for nearly 88 per cent of all enterprises nationwide and contribute about 40 per cent of the country’s total tax revenue, the chamber said.

Under the proposal, however, the 20-per-cent corporate tax rate would not apply to real estate or mining companies, companies deriving income overseas, or for companies providing services subjected to special consumption taxes.

To discourage debt defaults, the proposed revision to the law would include a provision the amounts owed could not exceed four times equity.

Chamber president Vu Tien Loc said that the current tax rate of 25 per cent was higher than other countries in the region. Thailand recently cut its corporate income tax from 30 per cent to 23 per cent, while rates applied to SMEs in Japan, South Korea and Taiwan all hover at around 15-17 per cent.