Small traders: Value-added tax threshold increasingly outdated

The economy, income and spending have changed greatly over the past 10 years, so the value added tax (VAT) rate for small businesses also needs to change to suit reality - Photo: PHUONG QUYEN

But what is the new level to ensure no budget loss, be suitable for real life and encourage small businesses to get rich legitimately?

The Ministry of Finance has just completed the fifth draft of the revised Law on Value Added Tax (VAT), which is expected to be submitted to the National Assembly for approval at the opening session at the end of October.

Many localities propose to increase the value added tax rate.

Commenting on the draft law, Can Tho City proposed exempting value added tax (VAT) for business households and individuals with revenue of VND350 million/year or less. The goal is to ensure an improvement in people's living standards and to be consistent with the family deduction level for income from salaries and wages.

Based on the proposed level, Can Tho cited an example of a worker who is supporting elderly parents and two school-age children, the total income exempted from personal income tax is 343,200,000 VND/year. Specifically, the deduction for the taxpayer is 11 million VND/person/month (132 million VND/year). The deduction for one dependent is 4,400,000 VND/month, so the total deduction in a year for four dependents is 211,200,000 VND.

Thus, with Can Tho's proposal, only small traders must pay VAT if their revenue is over 350 million VND, equivalent to an average daily income of over 972,000 VND.

Sharing the same view that the revenue threshold for small traders to pay VAT must ensure social equity for those with income from salaries and wages, Quang Ngai province proposed that the law exempt VAT for households and individuals with revenue below the threshold of 300 million VND/year. This means that only small traders with revenue above 300 million VND/year must pay VAT.

According to Quang Ngai province, revenue includes the cost of goods. With the current level of revenue and prices of goods and services, almost all small businesses are subject to tax collection. If the cost of goods accounts for 80% of revenue, it will not ensure the minimum living income of the business.

Small traders should be encouraged.

Commenting on the VAT revenue threshold for small businesses, the Ministry of Planning and Investment stated that it must be consistent with reality and encourage the private economy, motivate individuals and households to enrich themselves legitimately, and at the same time not miss out on revenue sources.

According to expert Nguyen Thai Son, the tax threshold of 100 million VND/year, equivalent to 280,000 VND/day, is not suitable for reality. This is obvious to everyone, but up to now the management agency has not changed it, possibly due to concerns about a decrease in revenue.

"Compared to the family deduction for salaried employees, the level of 100 million VND/year is also much lower. Meanwhile, business households often have 5-7 people working together but are only calculated at a common threshold of 100 million VND/year. This is too unreasonable. Therefore, the management agency should soon amend it to suit the reality and not just worry about the decrease in revenue," Mr. Son suggested.

Responding to the above proposals, the representative of the VAT Law Drafting Committee of the Ministry of Finance said that raising the threshold of revenue above 300 million VND to be subject to VAT will affect the state budget revenue at the local level, especially in low-income localities. In addition, if the threshold of 300 million VND/year is applied to be subject to tax, it will not encourage households and individuals to switch to establishing enterprises.

In the latest draft of the revised VAT Law, which the Ministry of Finance completed after receiving comments from ministries, branches and localities, the threshold for revenue from goods and services that small businesses must pay VAT on is over VND200 million/year. If the price index fluctuates by 20%, the National Assembly Standing Committee will consider adjusting it in accordance with the fluctuations of the price index and the actual situation.

* Delegate TRAN VAN LAM (standing member of the Finance and Budget Committee):

Expected to ask for National Assembly's opinion on revenue threshold

The current VAT Law stipulates that the VAT-exempt revenue is VND100 million/year. The revised bill proposes to raise the VAT-exempt revenue from the sale of goods and services. It is expected that the National Assembly Standing Committee will seek the National Assembly's opinion on the proposal of a certain starting level and the subsequent revenue levels will be adjusted when there are fluctuations in the socio-economic situation, and the National Assembly Standing Committee will decide according to the Government's proposal. This proposal is intended to create flexibility, avoiding having to amend the law each time to adjust this revenue level.

The starting revenue level of 200 or 300 million VND/year is being carefully considered. The Government is proposing a revenue level of 200 million VND/year. However, the drafting research department finds that the revenue level of 200 or 300 million VND/year must have a basis and basis. Previously, when building the VAT Law in 2013, the revenue level of 100 million VND/year was determined according to the socio-economic situation at that time.

After more than 10 years of amending the law, the fluctuations in inflation index, purchasing power of money, average income per capita... have changed significantly. So the first basis here is to determine how much has changed from this fluctuation compared to the reference base in 2013 up to this point.

Along with that, when calculating the expected revenue like that, is the average income of the households exempted or reduced within the scope of determining the income of poor households? That is, there must be sufficient evidence, including data on the new poverty line, from which to provide a basis for selection. The Standing Committee of the National Assembly has not yet finalized a certain starting point.

Source: https://tuoitre.vn/ho-buon-ban-nho-nguong-ap-thue-gia-tri-gia-tang-ngay-cang-lac-hau-20240823081909328.htm