Taxes should really be a tool to protect the economy.

At the end of the discussion session on the draft Law on Value Added Tax (amended) on June 24, Minister of Finance Ho Duc Phoc explained and clarified a number of issues raised by National Assembly deputies.

VAT has a very wide scope of regulation.

Minister Ho Duc Phoc said that VAT has a very wide scope of regulation and is levied on most types of goods and services, so it will affect the interests of many manufacturers and businesses.

Therefore, the provisions in the draft Law need to ensure the development of production and trade, thereby providing unified regulations in accordance with the Tax Strategy according to the Party's Resolution. Therefore, the drafting committee should study very closely and assess the impact of each issue related to VAT policy, covering all revenue sources, in accordance with international practices.

The Minister said that according to the strategy by 2030, 16-17% of GDP must be mobilized into the budget, of which taxes and fees are 14-15% of GDP; the domestic revenue rate must reach 86-87%.

“Through the opinions of National Assembly delegates, the drafting agency would like to absorb, listen to opinions and re-evaluate the impact of each policy package and the issues that are still being debated to ensure consistency when promulgating at the next session,” said Mr. Phoc.

Minister of Finance Ho Duc Phoc explains (Photo: National Assembly Media).

Explaining a number of issues raised by many delegates regarding the regulation assigning the Government to regulate goods and services for households and individuals that are not subject to VAT, the Minister said that the provisions in the law must ensure that they are consistent with world trends.

“Taxes must truly be a tool to protect the economy and must adapt to the process of leading, operating and managing the economy, especially the macro economy,” Mr. Phoc said, adding that decentralization to the Government is extremely important and ensures flexibility and efficiency in the operating process.

The Minister said that the level of non-taxable revenue needs to be calculated in balance with the inflation situation, the CPI increase as well as the increase in salary and other expenses. For example, at this time, the level can be set at 100 million VND, but next year it can be adjusted to 150 million VND, the year after that to 200 million VND... Therefore, assigning the regulation to the Government will be more flexible.

According to the Minister, before advising the Government, the Ministry of Finance must make a comprehensive assessment, from the CPI index to goods, to salary increases, currency devaluation, the impact of exchange rates... only then can appropriate regulations be issued.

"If the above content does not assign authority to the Government but stipulates the authority of the National Assembly Standing Committee, the implementation steps will have more steps and procedures and it will take at least 6 months to be able to amend the policies," said Mr. Phoc.

Fertilizer prices are not only affected by taxes.

Regarding the tax rate regulations for fertilizers, many opinions say that the 5% tax should not be imposed while there are many opposing opinions. The Minister said that from the time the VAT Law was drafted in 2008 to 2013 and 2014, fertilizers were included in the 5% taxable category and then removed from the taxable category.

The Minister informed that currently, domestic fertilizer production output is 73.3%, while imports are 26.7%. The 5% tax rate will not create inequality between domestic enterprises and import enterprises. In addition, VAT refunds will create resources for enterprises to continue investing in technological innovation, reducing product costs and developing sustainably.

According to the Minister, fertilizer prices are not only affected by taxes but also by supply and demand of goods. If supply increases, prices will be cheaper; conversely, if supply is low, prices will be higher.

Discussion session on the revised Law on Value Added Tax on the afternoon of June 24 (Photo: National Assembly Media).

Regarding VAT on small-value imported goods, the Minister informed that this content is currently implemented according to Decision No. 78/2010 of the Prime Minister on the basis of implementing international agreements. However, many countries have now abandoned this regulation.

Typically, the EU has abolished the VAT exemption for shipments of 22 Euros or less; the UK has abolished the VAT exemption for imported goods valued at 135 pounds or less; Thailand has implemented a 7% VAT on all imported goods...

Regarding the issue raised by the delegate regarding taxable real estate business, the Minister stated that land use fees and land rent are not subject to tax. However, real estate business will have to invest in inputs such as infrastructure, equipment, materials, etc., and if input tax is deductible, output VAT must be paid. If it is not taxable, input tax will not be deductible.

Regarding the expansionary fiscal policy, the Minister said that by the end of 2024, this policy should be completed and a focus should be placed on implementing a tight fiscal policy, in line with current trends, to enhance public financial strength, focusing on development investment and social security.

The Minister affirmed that the drafting agency will continue to listen to and absorb the opinions of National Assembly deputies, assess the impact of each policy and controversial issues to continue perfecting the draft Law .

Source: https://www.nguoiduatin.vn/bo-truong-tai-chinh-thue-that-su-phai-la-cong-cu-bao-ve-nen-kinh-te-a669795.html