Concerns about autonomous schools and hospitals having to pay corporate income tax

Discussing the draft Law on Corporate Income Tax at the National Assembly on the morning of May 12, National Assembly deputies said that it is inappropriate for autonomous public health andeducation units to still be subject to corporate income tax and not to leave revenue for infrastructure development investment.

According to delegate Hoang Van Cuong ( Hanoi ), these public facilities are invested by the state, and the value of assets is not fully depreciated. The difference between revenue and expenditure is not actually income but the remaining depreciation. Therefore, being counted as taxable income leaves the unit without resources for reinvestment.

Furthermore, calculating corporate income tax at a rate of 2% on revenue is the reason for increasing tuition and hospital fees, adding to the burden of payment for people.

"The activities of public health and education units need to be included in the list of entities not subject to corporate income tax, except for joint ventures and associated units," said Mr. Hoang Van Cuong.

Representative of the medical sector, Director of Hanoi Medical University Hospital Nguyen Lan Hieu said that the tax authority currently only bases its tax collection on the word "service" because the health system has the concept of revenue from public career services. Therefore, most of the revenue sources of autonomous public hospitals are currently taxed.

Vice Chairman of the Economic and Financial Committee Nguyen Van Chi argued that public service units only pay taxes on additional business activities, such as joint ventures and external partnerships, at a rate of 2%. Expenses such as hospital fees and tuition fees of hospitals and autonomous public schools are not subject to tax.

However, delegate Hoang Van Cuong added that the current law stipulates that units such as schools and hospitals that use the budget will not be subject to tax, but autonomous units that do not use the budget will be subject to tax. Therefore, for units with full financial autonomy, revenues such as tuition and hospital fees are still subject to corporate income tax. Mr. Cuong proposed to revise this regulation to suit reality.

Delegate Nguyen Lan Hieu also proposed to supplement the regulation that public service units in the health sector are exempt from corporate income tax on medical examination and treatment service revenues that do not include all costs of price formation such as labor, depreciation of medical equipment, fixed assets, management costs, etc.

Currently, the service price set by the State has not taken into account all factors. Therefore, the hospital will not be able to cover the arising costs and will not have profit to pay taxes.

Furthermore, medical examination and treatment services are priced according to the price levels set by the Ministry of Health and the Provincial People's Council. This is revenue from public service activities, not revenue from production and business activities.

Explaining to the National Assembly, Minister of Finance Nguyen Van Thang said that currently, many public service units provide services using the budget or part of the budget. In cases where public service units decide on service prices according to the market, it is reasonable that this income should be subject to tax.

For public service units using state funds, the service prices do not include full costs, and the budget supports a part of the price structure. These activities do not generate profits, so they can enjoy incentives and tax exemptions.

The Minister of Finance affirmed that the drafting agency "has calculated everything", put it into the draft and continues to study and adjust it, ensuring it is suitable for reality, the rights and legitimate interests of public service units and does not cause tax and budget losses.

Source: https://vietnamnet.vn/ban-khoan-viec-truong-hoc-benh-vien-tu-chu-phai-chiu-thue-thu-nhap-doanh-nghiep-2400331.html