Ministry of Industry and Trade: Whether to remove VAT from electricity prices or not depends on the Ministry of Finance

The Minister of Industry and Trade said that VAT is regulated by the Tax Law. Whether or not this tax can be removed from electricity bills requires a clearer answer from the Ministry of Finance .

On the morning of August 21, Minister of Industry and Trade Nguyen Hong Dien continued to answer questions about electricity prices. Photo: Le Hieu.

At the question and answer session of the Minister Ministry of Industry and Trade On August 21, delegate Pham Van Hoa ( Dong Thap ) expressed concern about the current application of the electricity price ladder, which is not suitable for people's needs, especially step 1, which is only up to 50 kWh for household electricity. In addition, it is unreasonable that people paying for electricity must pay an additional 10% VAT.

However, Minister of Industry and Trade Nguyen Hong Dien said that the tiered electricity price model is a popular model in many countries, helping customers use electricity economically and efficiently.

This mechanism is more specific than other industries because the more electricity is produced, the more it affects the environment. Energy is also a large emission industry.

In Vietnam, according to Decision 28/2014, the average retail electricity price structure consists of 6 levels. Up to now, implementing the resolution of the National Assembly Standing Committee and the direction of the Government, the Ministry of Industry and Trade has presided over the amendment and supplementation of this Decree.

In the draft submitted to the Government, the Ministry decided to adjust the retail electricity price list from 6 levels to 5 levels. In the first level, 0-50 kWh will be increased to 0-100 kWh to support the poor, while maintaining the support level for the poor and people in difficult circumstances from the State budget.

To gradually eliminate the unreasonable gap between electricity users, the commander of the industry and trade sector said that this draft will adjust the price framework for production, business and daily life to be closer.

"Some manufacturing sectors will be adjusted to match the price list in the service sector as well as in daily life to ensure no cross-subsidy among electricity users," Minister Dien shared.

Regarding the issue of VAT on electricity bills, the Minister of Industry and Trade said that this is a regulation of the Tax Law, applied to all goods in transactions. Whether this tax can be removed from electricity bills or not requires a clearer answer from the Ministry of Finance.

Accepting the proposal of the Minister of Industry and Trade, Minister of Finance Ho Duc Phoc said that tax is the main source of revenue for the State budget, and only when tax is collected can it ensure the stability of public finance and cover social issues such as social security.

Therefore, it is unreasonable to reduce taxes to solve a problem based on prices that do not fluctuate with the market. In fact, in the past 5 years, the National Assembly has continuously had policies to reduce and support taxes.

For household electricity, there are priority regulations, supporting poor families and policy families with 30 kWh.

The Minister of Finance also added that the first price of the ladder electricity is equivalent to 92% of the average price, and when expanded to 100 kWh in the near future, it will be equivalent to 95% of the average price.

Source