On December 27, 2023 in Hanoi, the People's Representative Newspaper organized a discussion "Contributing ideas to the drafting of the Law on Special Consumption Tax (amended).
| Amendments to the Law on Special Consumption Tax need to be carefully considered |
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In Resolution No. 115/NQ-CP on the thematic meeting on law-making in July 2023, the Government assigned the Ministry of Finance to complete the dossier proposing the development of the Law on Special Consumption Tax (amended) to be incorporated into the Government's proposal to supplement the National Assembly's Law and Ordinance Development Program in 2024; submit this law to the National Assembly for comments at the 7th Session (May 2024) and approve it at the 8th Session (October 2024).
In that context, the People's Representative Newspaper organized a discussion on "Contributing ideas to the drafting of the Law on Special Consumption Tax (amended)" to record opinions and policy proposals from National Assembly deputies, economic experts, and the business community, thereby contributing to the process of perfecting the special consumption tax policy.
At the seminar, speakers affirmed that since 2008, the Law on Special Consumption Tax, after being amended and supplemented four times, has come into effect and had a positive impact on many aspects of the economy and society.
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| Ms. Nguyen Thi Mai Phuong, Vice Chairwoman of the National Assembly's Committee on Law |
“Although there are still some limitations, it can be said that the Law on Special Consumption Tax not only contributes to the budget revenue but is also an effective policy tool to guide production and consumption in society,” commented Ms. Nguyen Thi Mai Phuong, Vice Chairwoman of the National Assembly's Law Committee.
According to the Ministry of Finance's assessment, the special consumption tax policy still has some limitations such as: the taxable subjects are still narrow compared to international practice; some regulations on taxable subjects, non-taxable subjects, and item descriptions in the Tax Schedule are not really clear, leading to difficulties in implementation. Along with that, the tax rates on some items affecting health and society have not achieved the goal of limiting consumption...
From that reality, the speakers at the seminar emphasized that amending the Law on Special Consumption Tax is necessary to further promote the role of this tax in accordance with the Party and State's policies and orientations on perfecting the special consumption tax policy to regulate consumption in line with consumption trends in society towards protecting people's health and the environment, ensuring reasonable mobilization of resources for the state budget and in line with international tax reform trends. The amendment of the Law needs to ensure overcoming obstacles and shortcomings in the practical implementation of the Law.
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| Mrs. Nguyen Thi Cuc |
According to Ms. Nguyen Thi Cuc, Chairwoman of the Vietnam Tax Consulting Association, the process of amending the Law must balance three aspects: the health of the people and the community; state budget collection and creating conditions for businesses to recover and develop better.
In Resolution No. 115/NQ-CP, the Government basically agreed on 7 policy groups when developing the Law on Special Consumption Tax (amended). That is, completing regulations on: subjects subject to special consumption tax; subjects not subject to special consumption tax; tax basis; tax price; tax rate; special consumption tax refund and completing regulations on implementation terms.
Regarding the policy of perfecting regulations on tax bases and special consumption tax rates, the Government proposed that the Ministry of Finance develop a mixed tax calculation method (tax rates based on percentages and absolute tax rates) for alcohol and beer according to the Prime Minister's Tax System Reform Strategy to 2030, in line with international tax reform trends; develop solutions to adjust and increase special consumption tax rates on alcohol, beer, and tobacco at appropriate tax rates, according to a roadmap on the basis of ensuring the special consumption tax target contributes to production orientation and limits the use of products that are not beneficial to health.
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| Assoc.Prof.Dr. Dinh Trong Thinh |
According to Associate Professor, Dr. Dinh Trong Thinh, an economic expert, the mixed tax model is increasingly being applied by many countries. As of 2018, 62 countries have applied mixed taxes (up from 55 countries in 2008). In ASEAN, Thailand, Malaysia and the Philippines have implemented the mixed tax model on some categories of alcoholic beverages.
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| Dr. Dang Thi Thu Hoai |
Dr. Dang Thi Thu Hoai, Head of the Department of Economic Research of Industry and Sector, CIEM said: “It is not by chance that developed countries apply the mixed tax model. We have conducted some research on this issue and the research results show that it is time for Vietnam to apply a mixed tax on alcoholic beverages instead of the current relative tax. The important issue is the specific conditions and implementation methods.”
Sharing the results of CIEM's research on the effectiveness of mixed taxes, Ms. Hoai said that applying the mixed tax method will make the price of high-end alcohol products relatively cheaper than if a relative tax is applied. Thus, consumers will switch to using alcoholic beverage products with better quality, limiting the use of cheap products, of unknown origin, not ensuring food safety and quality... and thus increasing budget revenue from the official alcoholic beverage sector. Estimated results show that mixed taxes help increase budget revenue by about 25% compared to relative taxes.
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| Ms. Dang Ngoc Huong |
Meanwhile, according to Ms. Dang Ngoc Huong, Wine and Spirits Subcommittee, European Chamber of Commerce in Vietnam (Eurocham), the relative tax method was previously suitable for Vietnam, because of its advantages of automatically adjusting to inflation, minimizing frequent tax adjustments; convenient for tax collection and management. However, relative tax does not bring the desired effect in reducing product consumption and can lead consumers to consume low-quality, illegal products.
According to Ms. Dang Ngoc Huong, special consumption tax aims at three goals - consumer health, budget, ensuring fairness among businesses. Depending on the higher goal, Vietnam will choose the appropriate tax model. To ensure consumer health, absolute tax is best, but under Vietnam's conditions, it should not be applied because it can cause difficulties for domestic businesses.
“We need a shift, which is the mixed tax model, and this model is feasible in Vietnam’s current conditions,” Ms. Huong said. Citing the case of the Philippines, which encountered some difficulties when switching to a mixed tax, Ms. Huong said that the country has reduced alcohol consumption by its people, while also solving the issue of fairness between domestic products and imported products.
Ms. Nguyen Thi Cuc shared that the trend of applying mixed taxes to alcoholic beverages is clear, because this is an advanced method in the world. Furthermore, Decision No. 508/QD-TTg approving the Tax System Reform Strategy until 20230 has requested research on the application of a combination of proportional tax rates and absolute tax rates for a number of goods and services subject to special consumption tax. And recently, Resolution No. 115 of the Government has oriented this issue. However, the application of mixed taxes must have a specific and public roadmap so that businesses can be best prepared.
The Law on Special Consumption Tax (amended) when promulgated is expected to have a strong impact on consumer behavior as well as business operations and the state budget. Speakers attending the seminar expect that after this amendment, the Law on Special Consumption Tax will further promote its role in life, economy and society; ensure a stable and favorable business environment; harmonize the interests of the State, people and businesses as well as be consistent with international practices.Source link
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