Special consumption tax proposed on mobile phones hinh anh 1Illustrative image (Source: Vietnam +)

Ho Chi Minh City (VNA) -The Ho Chi Minh City government said in its proposal that the value-added tax (VAT), the special consumption tax and the environmental protection tax, among others, are areas with potential for further tapping.

This is the content of the document which has just been sent to the Ministry of Finance by the People's Committee of Ho Chi Minh City for the draft project on expanding the list of commodities subject to special consumption tax in order to prevent erosion of state budget revenue.

Mulling ‘special consumption tax’ for mobile phones

According to the People's Committee of Ho Chi Minh City, regarding special consumption tax, it is possible to add to list of taxable items a number of goods and services, such as mobile phones, cameras, perfumes, cosmetics, game services and plastic surgery services.

According to the Ho Chi Minh City government, perfumes and beauty services fall within the category of high-end goods and services. This helps widen the adjustment of income taxes among high earners.

The remaining products and services in the proposal, despite not being classified as luxuries, are not deemed essential. Therefore, the city government stated that it is necessary to levy excise taxes on them to boost production and consumption in a more reasonable manner.

The authority noted that mobile phones are an essential type of product for communication needs, but they should be subject to special consumption tax to regulate the incomes of high earners who have a strong demand for new-generation high-end products.

As for smartphones, obviously not a product only used by the rich, the city administration says excising them only affects high and upper-middle income groups, who usually purchase the newest and expensive products.

Statistics from the General Statistics Office revealed that Vietnam had imported 3.6 billion USD worth of phones and phone parts during the year up to April, marking a 15.5 percent decline from a year earlier.

In other groups of taxes, Vietnam has 25 groups of goods and services exempt from value added tax (VAT), while other countries typically have only four to eight groups of excluded items. According to the city government, too many items are now exempt from value added tax (VAT).

Therefore, the city government has suggested the Ministry of Finance consider eliminating some of these items from the exemption list.

Accordingly, those that are not subject to value-added tax include credit services, securities trading, goods and services paid by the State, such as weapons and military equipment for national defense and security.

More areas with potential for further tapping

Meanwhile, environmental protection tax should be applied to batteries, accumulators and pesticides since their production and use pollutes the environment, explained the Ho Chi Minh City government.

“In line with development of the economy, it is necessary to continue adding products polluting the environment to the list of commodities subject to environmental protection tax,” Ho Chi Minh City government said.

With regard to the property tax, real estate is the area with potential for further tapping.

Viet Nam has now levied agricultural land use tax and non-agricultural land use tax while it has not imposed taxes on houses and architecture works on land (real estate).

With regard to personal income tax, the Ho Chi Minh City authority recommended partially slashing the tax and adjusting family allowances for the middle-income people to avoid creating too heavy a tax burden for this demographic./.