Tax payers at the Hanoi Tax Department on Giang Vo street (Photo: VNA) Hanoi (VNS/VNA) - The Ministry of Finance (MoF) has introduceda draft of amendments to laws on Value Added Tax, Special Consumption Tax,Corporate Income Tax, Personal Income Tax and Natural Resources Protection Tax.
Pham Dinh Thi, Director of the ministry’s Tax Policy Department,said at the press conference on August 15 that the amendments are needed to addressdifficulties that remained for tax paying businesses and individuals, ensure acoherent legal framework, and better deal with rising public debts.
He said that under adjustments made to the Law on Value Added Tax,there will be fewer goods and services entitled to the preferential level offive percent VAT. The proposed amendments contain two options: increase thebase VAT level from 10 percent to 12 percent from the beginning of 2019, orincrease it to 12 percent from 2019 and to 14 percent from 2021.
Other changes include a regulation on businesses having thecurrent level of 5 percent VAT being reimbursed in full if they can prove thattheir input VAT amount (levied on input goods used for export) has yet to becompletely deducted after 12 months or four quarters.
Under another change, VAT deduction for non cash payment withinvoices is now inapplicable to purchases of less than 10 million VND (445 USD)instead of the current 20 million VND (890 USD).
Amendments to the Special Consumption Tax (SCT) will incorporatesoft drinks into the list of goods and services on which a 10 percent SCT willbe levied from 2019.
The SCT on tobacco-based products will rise to 75 percent in 2019,from the current 70 percent. Besides, a flat SCT of 1,000 VND (0.04 USD) per packof 20 cigarettes and 1,500 VND (0.06 USD) per cigar will apply from January 1,2020.
Trucks and semi trucks will be subjected to an SCT of 60 percentof the SCT borne by passenger cars of the same horsepower. The SCT on passengercars with less than nine seats will also be changed in order to comply with thenational auto industry development strategy, but this was not specified.
Under changes to the Corporate Income Tax (CIT) Law, a 15 percentCIT will apply to extra small businesses whose annual revenue is less than 3billion VND (133,690 USD), whereas small and medium sized firms whose annualrevenues range from 3-50 billion VND (133,690 USD to 2.2 million USD) will besubjected to a CIT of 17 percent.
Other changes will also be considered in order to facilitate domesticbusinesses and encourage investment in manufacturing goods with high addedvalue, in support industries and high quality services.
Tax adjustments will also seek to facilitate aid for remote areaswith poor socioeconomic conditions, officials said at the press conference.
The latest adjustments are designed to accommodate somepreferential policies issued recently by the NA in addition to the law onsupporting small and medium-sized enterprises and the Law on Investment.
The laws on Natural Resources Protection Tax and Personal IncomeTax will undergo minor changes to ensure compliance with existing regulationson electricity, customs clearance and natural resources, increase uniformityand reduce administrative problems for tax paying entities, the officials said.
Thi also said that despite the NA’s intention to amend theproperty tax, for the time being, no extra tax level will apply on second ormore properties owned by an individual.
The income tax paid by lottery winners will be increased while itwill be decreased for people with low personal incomes, he said, withoutspecifying.
He said the changes were being made in accordance with the presentnational economic conditions in order to accommodate growth and globalintegration.
At the moment, Vietnam has not followed most nations in the worldin increasing its taxes. As many as 166 countries increased their taxes in2016. In the EU, income tax increased to an average of around 21.5 percent from19 percent in 2000.
Meanwhile, the average tax level rose to higher than 19 percent inthe Organisation for Economic Co-operation and Development (OECD) nationslast year, and Asian countries like Japan or India followed suit.
Vietnam’s neighbours like China, Cambodia and the Philippines haveaverage tax levels of 17 percent, 10 percent and 15 percent, respectively.
The Finance Ministry, therefore, considers the latest changesunder the 10-year (2011-2020) National Tax System Reform Strategy as“reasonable” and in compliance with previously signed trade agreements.
The amendments are also based on previous tasks set by theNational Assembly (NA) and the Politburo regarding the Tax System ReformStrategy via resolutions like 07-NQ/TW, 25/2016/QH14 or 35/NQ-CP.
Among other things, they are aimed at improving competitivenessand preventing losses to the State Budget via various forms of tax fraudincluding price transferring, Thi said.
He added that the MoF hopes to provide a sense of direction forboth manufacturers and consumers, moving the business community towards bettertax contributions through higher incomes and diversified production, dependingless on preferential treatment from the State.-VNA
VNA
