HANOI: In the proposed amendments to the Value Added Tax (VAT) Law, the Finance Ministry has put forward a revision that would require individuals and household businesses with an annual revenue of 150 million dong to pay VAT.
This is an an increase of 50 million dong from the current threshold.
However, the proposal has sparked a range of differing opinions and concerns.
The ministry argues that since the 2013 amendment to the VAT Law, which supplemented some provisions of the 2008 VAT Law, the consumer price index (CPI) has seen a significant increase.
Therefore, adjusting the revenue threshold for individuals and household businesses to reflect these price fluctuations is deemed necessary.
Furthermore, the Finance Ministry asserts that increasing the revenue threshold for VAT would not result in additional compliance costs or administrative procedures. Instead, it would enhance tax transparency.
However, some stakeholders argue that the proposed threshold is still relatively low. They suggest that industry-specific considerations should be taken into account.
In its feedback to the Finance Ministry, the Vietnam Chamber of Commerce and Industry (VCCI) recommended the drafting agency consider raising the revenue threshold for tax-exempt households and individual businesses to a range of 180 million dong to 200 million dong.
The VCCI suggested that the Finance Ministry consider industry-specific classifications, similar to the direct tax calculation method used in the distribution and supply sectors.
This would involve setting a higher threshold for goods distribution compared to services and construction, it said.
The highest proposed threshold came from representatives from Quang Ngai province who suggested raising it to 300 million dong, while other agencies believed lower levels were the best way forward.
The Transport Ministry suggested 250 million dong, while the Vietnam Tax Consultants’ Association (VTCA) recommended a threshold of between 180 million dong and 240 million dong.
According to the VTCA, Decree 07 stipulates that the standard income for poor households in rural areas is 1.5 million dong per person per month, and in urban areas, two million dong per person per month.
Therefore, someone earning 18 million dong a year would be considered “poor or near-poor”.
The VTCA’s calculations suggested that, assuming a 10% tax rate for the commercial business sector, the taxable income would be around 10 million dong. This means that after a business earns 150 million dong, the additional value would be 15 million dong, even below the national poverty standard. — Viet Nam News/ANN
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