Decree 44/2023/ND-CP of the Government: Stimulating the business "circulatory system"

08:04, 08/08/2023

On June 30, 2023, the Government issued Decree 44/2023/ND-CP stipulating the policy of reducing value-added tax (VAT) according to Resolution No. 101/2023/QH15, dated June 24, 2023 of the National Assembly , effective from July 1 to the end of 2023. This is a positive signal, helping to stimulate the business "circulatory system". However, the implementation time of this resolution is relatively short, will businesses have time to "recover"?

Launching a “ closed economic circle”

Decree 44/2023/ND-CP stipulates the policy of reducing value added tax (Decree 44) stipulates VAT reduction for most groups of goods and services currently subject to a tax rate of 10%, except for telecommunications, real estate, finance, banking... and cases of goods and services that are not subject to VAT or subject to VAT at 5%. Business establishments (including business households and individual businesses) that calculate VAT according to the percentage method on revenue are entitled to a 20% reduction in the percentage rate for calculating VAT when issuing invoices for groups of goods subject to the reduction.

People shopping for goods are entitled to VAT reduction under Decree 44 at Co.opmart Buon Ma Thuot Supermarket.

From the perspective of enterprises, it can be seen that the reduction of VAT creates a closed circle in the economic development chain, because the "output" of one enterprise is also the "input" of another enterprise. From there, many goods are reduced in price, and consumers directly benefit. For example, currently MM Mega Market Buon Ma Thuot Supermarket is trading about 20,000 items, of which over 10,550 are eligible for tax reduction, including non-food items (stationery, cosmetics, household appliances, electronics, etc.) and food (processed food, confectionery, soft drinks, etc.).

The representative of MM Mega Market Buon Ma Thuot said that the tax reduction policy brings many benefits to wholesale and retail businesses like MM Mega Market. Currently, the company owns 21 wholesale and retail centers nationwide, along with 5 supply stations and 2 transit warehouses, with more than 30,000 products and attracts more than 1 million customers/month. With a large volume of goods and customer files, the VAT reduction policy has greatly supported businesses in saving costs of operating the supply chain and indirectly supporting revenue through stimulating consumption. Thereby, creating conditions for businesses to maintain, restore production, expand business and operate effectively.

According to Mr. Nguyen Ngoc Thang, Director of Operations of the Co.opmart chain, the VAT reduction is a practical plan to respond to the policy of supporting the rapid recovery and development of production and business activities, creating a growth engine for a number of important industries and sectors of the State and sharing spending pressure with consumers. This is the second time that VAT has been reduced by 2% synchronously from import, production to processing and consumption, which has a direct effect of helping consumers save money on shopping and stimulating reinvestment in production and business with input materials or repurchasing more consumer goods.

When VAT is reduced, it means that the prices of goods will "cool down", people will save money, and with the same amount of money they will be able to buy more goods, which helps to stimulate consumption. Ms. Nguyen Thi Thanh (Tan Loi Ward, Buon Ma Thuot City) said: "My family has 5 people, each month we have to spend about 8 million VND to buy food and household items for the whole family. Since the VAT reduction policy was introduced, many goods have been discounted, I don't have to consider how to spend reasonably within that amount of money, because with reduced prices I will be able to buy more goods than before".

Consumers shop at MM Mega Market Buon Ma Thuot.

Will businesses be able to "recover" in time?

The 2% VAT reduction policy is like "killing many birds with one stone", helping consumers benefit, businesses increase their "resistance" and "feed" revenue for the budget. However, in the context of the economic recession, many businesses are still facing financial difficulties, so the implementation period of this policy within 6 months is relatively short. Through a survey, a number of businesses in the province shared that the tax reduction in a relatively short period of time only helps their financial problems stop at the level of improvement. Therefore, they believe that it is necessary to extend the VAT reduction period until the end of 2024 to truly "revive", remove the financial "burden" to continue investing in development.

For example, MM Mega Market Buon Ma Thuot Supermarket, along with tax reduction, is implementing promotional programs: 2 weeks/time, weekend, 7th birthday, along with wholesale price programs for fresh food items; price stabilization "lock price" for essential items; special preferential prices for some products for bills worth over 500,000 VND or 800,000 VND. However, according to the supermarket representative, after more than a month of implementation, the purchasing power of enterprises has not increased significantly. Because the tax reduction is applied for a short time, it only meets the demand for stimulating consumer purchasing power. If the application period is extended, it will promote the production of goods to develop in a positive direction, enterprises will have investment moves, expand production and business, then it will bring more benefits to enterprises.

The Provincial Tax Department said that after Decree 44 took effect, the unit issued a document directing the entire industry, units and affiliated departments to urgently implement, promote propaganda, dissemination and support to all businesses and taxpayers who are eligible for the benefit. In addition, the Provincial Tax Department has built a tool to look up reduced and non-reduced goods and services on the unit's website so that taxpayers can easily look up whether their goods and businesses are eligible for VAT reduction. At the same time, promptly deploy and organize the reception of documents and administrative procedures related to tax reduction, creating the most favorable conditions for taxpayers to enjoy the policy and implement it most easily.

Khanh Huyen

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