Proposal to exempt VAT for science and technology services

DNVN - Exempting value-added tax (VAT) for science and technology services will encourage investment in research and development, especially from domestic and foreign enterprises.

Commenting on the 5% tax rate applied to science and technology services as prescribed by the Law on Science and Technology at Point m, Clause 2, Article 9 of the draft Law on Value Added Tax, Mr. Nguyen Duy Minh (National Assembly Delegation of Da Nang City) said that applying a 5% tax rate to science and technology services in Vietnam could bring some short-term benefits in terms of budget revenue and more transparent management.

Furthermore, applying this tax rate instead of a complete tax exemption can help manage and monitor science and technology activities better, which can minimize the risk of policy abuse.

However, Mr. Minh proposed that the National Assembly and the Drafting Committee consider and allow scientific and technological services to be subject to no value added tax.

Mr. Nguyen Duy Minh (National Assembly Delegation of Da Nang City) proposed exempting VAT for science and technology services.

According to Mr. Minh, the exemption of VAT for science and technology services will encourage investment in research and development, especially from domestic and foreign enterprises. Reducing investment costs will create favorable conditions for enterprises, research institutes, and technology organizations to develop, thereby promoting the knowledge economy. Applying tax rates can reduce this motivation, especially in the context of the need to promote innovation and technology development in Vietnam.

In the European Union, many countries have also exempted VAT on research and development services to encourage innovation and technological development. In Singapore, the Singapore Government has also provided tax incentives for businesses investing in research and development of scientific and technological services, which has helped Singapore become one of the leading technology and innovation hubs in Asia.

"Exempting VAT will create conditions for businesses and organizations to focus on research and development of new technologies, thereby promoting innovation. This is very important for Vietnam to compete internationally and build a knowledge-based economy," Mr. Minh emphasized.

Delegates said that it is necessary to institutionalize the Party and Government's policies and guidelines in the past 5 years, such as Resolution 52 of the Politburo in 2019 on a number of policies and guidelines to proactively participate in the fourth industrial revolution; Resolution 50 of the Government in 2020 on improving the business environment and enhancing national competitiveness; Strategy for science and technology development for the 2021-2030 period, and the article on digital transformation as an important driving force for developing productive forces, perfecting production relations, and bringing the country into a new era by General Secretary To Lam.

From the above analysis, delegates proposed to consider including the group of scientific and technological services in the list of subjects exempted from value added tax this time to ensure the best implementation of the major policies and orientations of the Party and State and not contrary to international practices.

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