Talk show “Inadequacies in taxation policy on microfinance activities in Vietnam”

In the morning of November 1st, 2011, Tinh Thuong One member Limited Liability Microfinance Institution (TYM) held a talk show on entanglements and inadequacies in taxation policies on activities of microfinance institutions in Vietnam at its Head Office.

Present at the talk show were the representative of the Central Vietnam Women Union, the Government Office, the Ministry of Finance, the Committee of National Financial Supervision, Vietnam Television, the Financial Review and the Institution of Banking. After discussing, the delegates arrived at a consensus that the particular operations of microfinance institutions, of which TYM is a typical example, are to provide credit and non – financial services to the poor in order to implement the social mission of poverty alleviation. Therefore, it is inadequate to treat microfinance institutions like commercial. To ustain their operations and development, microfinance institutions need favorable policiesfrom the State, especially in the field of taxation.

Speaking at the conference, Mrs. Nguyen Kim Thuy – the standing Vice President of Vietnam Women Union emphasized: “Over the past 19 years, TYM has supported over 80,000 poor women to climb out of poverty and to strive for life stability . This clearly demonstrates the social mission entrusted to TYM by Vietnam Women Union. Beyond providing loans, savings and micro – insurance products, TYM frequently delivers training courses to help women enhance their capacities in different aspects of life, thus contributing to poverty alleviation of the Party and of the State. A positive by-product is the improvement of women’s status, many of them are voted into People’s Committee at different levels and hold many important positions in mass organizations at local level. However, since it becomes the first microfinance institution licensed by the State Bank under the Government’s Decree No. 28 and No. 165, TYM has encountered many difficulties due to the imperfections in legal regulations on microfinance institutions, especially taxation policies. Thus, we hope to get the attention from the Party and the State to encourage and to motivate the development of organizations like TYM.

Mrs. Nguyen Van Phung – the Vice Head of the Department of Taxation Policies, the Ministry of Finance agreed that: “Microfinance institutions deserve benefiting from preferential taxation policies like other social organizations because the profit they earn is not distributed among the shareholders but retained for the equity’s expansion in order to serve more and more poor women all over the country.

On the same day, the delegation visited  Soc Son branch, Me Linh branch (Hanoi) and Phuc Yen branch (Vinh Phuc) to learn more about microfinance activities. Hopefully after this visit, governmental agencies and departments would make positive moves in promulgating and tailoring taxation policies to suit and promote more efficient operations of “social enterprises” Working for the poor.