Proposal not to tax individual households with revenue under 200 million VND

That means individual businesses with revenue under 200 million VND/year are proposed not to pay VAT.

Having been doing handicraft business on Hang Da Street (Hanoi) for more than ten years, Ms. Nguyen Thi Tuyet shared that all costs from electricity, water, input materials to rental space... increase every year. Therefore, the current threshold of annual revenue over 100 million VND that must pay VAT is no longer suitable.

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"Of course, for business households, in difficult times like this. Especially after Covid, our business is very difficult. Now everyone wants this increase to help businesses overcome difficulties in this difficult period and time," said Ms. Tuyet.

Pointing out the shortcomings of the current VAT Law, Associate Professor, Dr. Le Xuan Truong, Head of the Tax - Customs Department, Academy of Finance analyzed that the current tax threshold for business households is too low compared to reality. Because, in 2014, the average GDP per capita was about 40 million VND/person. Meanwhile, in 2023, this figure will be 101.9 million VND/person, about 2.5 times higher.

"In 2014, GDP per capita was a little over $2,000. In 2023, this number was over $4,000, which is double. It has doubled in 10 years and will definitely be a little higher in 2024. If we use such a standard, it means that the standard of living has increased, so the poverty level and the low level must also increase accordingly. That means the poverty line must also change. If so, it needs to be increased."

Affirming that the current threshold for VAT taxable revenue is too outdated, lawyer Pham Ngoc Hung, Ngoc Hung Law Firm, said that it would be more appropriate to raise the taxable revenue to 300 million VND/year:

"An annual income and revenue of less than 100 million/year is too outdated. Because with the current price level, the profit on the selling price is getting smaller and smaller. Therefore, the current regulation of 100 million is unreasonable. I think 300 million/year is more appropriate."

If the proposal to raise the VAT threshold for business households is approved, it will be good news for millions of business households nationwide. This is the basis to motivate and encourage business households and micro-enterprises to "grow quickly", quickly enter the market, and establish businesses. When the taxable revenue threshold is raised, the number of businesses and individual business households that are not subject to VAT will increase, which is an opportunity for this economic sector to grow. When establishing a company or enterprise, the taxable model and business model will be upgraded, which means they will contribute more to the State budget.

Dr. Mac Quoc Anh, Vice President and General Secretary of the Hanoi Association of Small and Medium Enterprises, Director of the Institute of Economics and Enterprise Development, said: "For small businesses, the tax burden is reduced. Businesses below the new threshold do not have to pay VAT, reducing financial pressure on small businesses and startups.

This encourages more people to get into business. Another thing is that it increases competition because reducing taxes will help reduce product costs, increasing competitiveness compared to larger businesses that have to pay taxes."

According to the Ministry of Finance's calculations, if the tax-free revenue level is set at VND200 million/year, there will be over 620,000 business households that will not have to pay tax. If calculated at VND300 million, there will be over 734,000 business households that will benefit.

Source: https://vov.vn/kinh-te/de-xuat-khong-danh-thue-ho-ca-nhan-co-doanh-thu-duoi-200-trieu-dong-post1116445.vov