As the tax cut makes the prices of many products lower, buyers flocked to supermarkets to hunt for bargains. (Photo: tuoitre.vn) NguyenNgo Anh Tuan, dry food manager of Lotte Mart Vietnam, noted the tax cutwas a timely policy that eased the financial strain felt by consumersamid the pandemic.
Theaverage tax incentives provided for a single household is estimated at severalhundred thousand of VND per month.
Accordingly,total monthly tax incentives could amount to tens of trillions of VND nationwide,representing a huge stimulus to consumer spending.
“Thetax cut is a boost to consumption. Lower prices mean I could buy more,” said ashopper in Hanoi.
Accordingto experts, not only consumers benefit from the tax cut, but also firms.
TaCao Phong, chairman of 22 Joint Stock Company, revealed that the company paid 15billion VND (661,304 USD) of VAT last year and was expected to pay more in2022.
However,the tax cut in early February was going to lower its tax bill by over 3 billionVND (132,261 USD) this year. The company plans to use this money to boostproduction and expand its market reach.
“Lowertax rates allow us to sell more, thereby pushing up sales and profits andresulting in more stable income for our workers,” added the chairman.
NguyenMinh Tuan, sales manager of Good Morning House JSC., disclosed that the companywas able to put aside a substantial amount of money thanks to the reduction inthe tax burden.
Hesaid the company could plough such a tax benefit into research anddevelopment to offer better services to clients.
MacQuoc Anh, head of the Economic and Business Development Institute, believed thelower tax rates would also encourage foreign investments since tax cutsreduce costs and improve competitiveness.
“Lowerinput costs make firms more competitive,” stressed the institute’s head.
Undoubtedly,the reduction of VAT has been giving a fresh impetus to firms’ operationsand speeding up economic recovery.
Directorof Ho Chi Minh City’s Tax Department Le Duy Minh estimated that the new taxpolicy would reduce the city’s tax revenues by around 8-10 trillion VND (353-441million USD) this year.
Sucha fall in tax collection seems financially painful to the tax authority, but hebelieves the tax cut would give firms a financial incentive tostep up production.
"Firmsmaking higher profits means higher revenues from other types oftax to offset the fall in VAT revenues," he added.
Manyretailers, supermarkets and hotels in HCM City have begun to apply the newVAT of 8 percent.
CentralRetail Vietnam said it made the switch on February 9 with more than20,000 items sold at its GO! and Big C networks having new prices.
Hotelsand restaurants in the city followed suit days later.
GrandSaigon Hotel said the new rate has been incorporated in all catering andaccommodation fees since last week.
However,some businesses such as Starbucks and The Coffee House had yet to adoptthe new rate. They said it would take a few more days to adjust price tags intheir coffee chains.
GrabVietnam said it would incorporate the change to some services by February 15.It will refund the difference to customers via drivers' wallet before February26.
"Ifbusinesses fail to apply the tax cut to the detriment of its customers,they will face severe penalties imposed by tax authorities," warned adeputy director of the Tax Policy Department under the General Department ofTaxation.
Thegeneral department has also been urging e-invoice service providersto help taxpayers file their tax forms under the new tax rate./.
VNA
