Finance Minister explains proposal to reduce VAT for only 6 months

On the afternoon of June 1, continuing the 5th session, the National Assembly discussed in a plenary session in the hall about continuing to implement the policy of reducing value-added tax (VAT) by 2% according to Resolution No. 43/2022/QH15 dated January 11, 2022.

Reporting and clarifying the proposal by some National Assembly deputies to extend the 2% VAT reduction until the end of 2025 or at least 2024, Finance Minister Ho Duc Phoc said that the 6-month reduction plan had been reviewed by the Finance and Budget Committee and commented on by the National Assembly Standing Committee before being submitted to the National Assembly at this session.

"Resolution 43 is only effective until the end of this year, which means another 6 months. The proposed plan is also consistent with the budget balance and policy goals to stimulate consumption and solve difficulties immediately, that is, in the current period," the Minister of Finance explained and affirmed that the proposal to reduce VAT until the end of 2023 is appropriate.

Minister of Finance Ho Duc Phoc.

Regarding the proposal to include cars in the list of goods eligible for a 2% VAT reduction, Mr. Ho Duc Phoc stated that cars are goods subject to special consumption tax and are not covered by Resolution 43. Cars are not included in the list of goods eligible for tax reduction because this policy focuses on tax reduction for essential sectors and goods.

The Minister of Finance emphasized that the issue is to do everything possible to create conditions for businesses, enhance business capacity, and increase the capacity of the economy .

"Creating conditions for businesses to produce and operate effectively by removing obstacles and difficulties to create a better market will have a greater effect than tax reduction. If taxes are reduced but there is no revenue, businesses will continue to face difficulties," said Mr. Ho Duc Phoc.

The head of the Ministry of Finance informed that the Ministry has also submitted to the Government a 50% reduction in registration fees for domestically produced and assembled cars and the Government agrees with this proposal.

Previously, giving opinions on continuing to implement the 2% VAT reduction policy, delegate Mai Thi Phuong Hoa (National Assembly Delegation of Nam Dinh province) said that many Vietnamese enterprises are facing difficulties in the context of many common challenges of the economy.

Delegate Mai Thi Phuong Hoa (National Assembly Delegation of Nam Dinh province).

Reflecting on the situation of many large enterprises having to sell off their assets, with the buyers being foreigners, delegates said that this situation is very worrying, especially when enterprises need to be maintained and supported to develop the economy.

According to Ms. Mai Thi Phuong Hoa, there needs to be a policy to nurture and support domestic enterprises, especially during difficult times.

Appreciating the implementation of tax solutions in recent times, delegate Mai Thi Phuong Hoa said that the flexible implementation of tax policies has contributed to reducing the cost of goods and services, promoting production and business, stimulating consumption, and creating revenue for the State budget.

Expressing agreement on continuing to implement the policy of reducing value added tax by 2% according to Resolution No. 43/2022/QH15, however, the National Assembly delegate of Nam Dinh province said that the Government's plan to extend until December 31, 2023 is too short.

"The difficulties and challenges in the coming time are quite large. To make this support more effective and give the policy enough time to take effect in practice, it is necessary to extend the 2% VAT reduction policy until the end of 2025 or at least until 2024," Ms. Mai Thi Phuong Hoa suggested.

At the same time, the delegate said that it is necessary to promptly guide the review of VAT refund applications quickly and effectively for people and businesses. In addition, it is necessary to study unprecedented policies such as requiring lending interest rates to be reduced to below 9%, changing lending conditions to be flexible, feasible and reasonable to support the business community.

Also speaking at the discussion session, delegate Nguyen Thi Viet Nga (National Assembly Delegation of Hai Duong province) proposed reviewing and considering expanding the scope of subjects eligible for value added tax reduction.

Emphasizing the importance of the domestic automobile manufacturing industry as it can promote the development of many other industries, Ms. Nguyen Thi Viet Nga proposed to consider expanding the scope of subjects eligible for value added tax reduction, applying an 8% VAT rate (2% reduction) to automobiles, including vehicles with less than 24 seats.

Delegate Nguyen Thi Viet Nga (National Assembly Delegation of Hai Duong province).

The female National Assembly delegate from Hai Duong said that, according to feedback, businesses in the automobile sector are facing a situation of large inventories, many costs arising, and declining revenue, causing difficulties in cash flow. Although the application of the 8% VAT rate causes a budget deficit compared to current regulations, automobiles are a type of commodity subject to high taxes, along with many types of fees (VAT, import tax, special consumption tax, registration fee, license plate fee, etc.).

According to Ms. Nguyen Thi Viet Nga, if demand is stimulated, the amount of money collected from other taxes and fees on a car will exceed the 2% tax reduction. This will contribute to increasing budget revenue as well as developing the automobile industry. In particular, it will stimulate the market to solve the current difficulties that businesses are facing.

"According to calculations, if VAT is reduced by 2% for a mid-range car sold, the State will reduce tax revenue by 10-15 million VND. However, businesses will contribute 200-300 million VND to the State budget from taxes and fees," Ms. Nguyen Thi Viet Nga analyzed.

Resolution No. 43/2022/QH15 stipulates: A 2% reduction in the value added tax rate in 2022, applicable to groups of goods and services currently subject to a value added tax rate of 10% (to 8%), except for the following groups of goods and services: telecommunications, information technology, financial activities, banking, securities, insurance, real estate business, metals, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, goods and services subject to special consumption tax.

According to ENGLISH (VTC News)

Source link