Hanoi (VNS/VNA) - A number of changes has been proposed to Vietnam'spreferential tax policies by the Ministry of Finance (MoF).

According to the ministry, measures should be taken to reduce costs forbusinesses and to improve the investment environment instead of tax benefits.

The ministry's proposed changes include a comprehensive review of businesses toput them in different categories based on industries and locations. Theministry said in recent decades, Vietnam has become one of the most attractivedestinations for business investments from most global industries.

Current tax policies, according to the ministry, have played an important rolein it.

"Foreign direct investment (FDI) flows into the country has been steadilyincreasing, despite global economic downturns," said the ministry.

However, the ministry said it's time Vietnam conducted a review of its currenttax policies to encourage investments in less developed parts of the countryand focus on key industries, which can help boost national development in thefuture.

"We observe a vast majority of businesses in only a handful of localities,namely the Mekong Delta and the Red River Delta, while the rest of the countrybenefits very little from FDI," said the ministry.

In addition, there were overlaps between preferential tax and social policiesin many localities, which resulted in a loss to the State's budget. The numberof businesses, which are mostly located in rich provinces and cities, that areentitled to tax benefits has been on the rise. In many instances, they havebeen enjoying the same benefits applied to businesses in less developed partsof the country.

A ministry's report said tax preferential policies are in effect in 54 of 63cities and provinces, not including high-tech centres and industrial parks.

According to the MoF, even without tax benefits, Vietnam will likely remain alarge investment hub in the region, thanks to key factors including politicalstability and the government's commitment to promoting business development.

The MoF cited international practices in which countries around the worldemployed tax policies as means to focus on key industries, develop science andtechnology, encourage start-ups and support development in disadvantagedregions.

The ministry, however, cautioned that any reduction in tax benefits is to becarefully reviewed and considered before implementation as regional competitionwill likely be fierce./.