Individual consumers find it difficult to perceive the VAT reduction policy.
At the end of November 2023, the National Assembly agreed to continue reducing value-added tax (VAT) from 10% to 8% and apply for half a year, from January 1, 2024 to June 30, 2024.
This is the third time the National Assembly has agreed to reduce VAT by 2%. Previously, the first time the National Assembly reduced the tax was from February 1, 2022 to December 31, 2022. The second time was from July 1, 2023 to December 31, 2023.
Individual consumers find it difficult to perceive the VAT reduction policy. (Photo: Moit)
According to reality, many people have known about the 2% VAT reduction policy from the beginning of 2024, but they have not felt much difference from this policy.
Talking to reporters of the Journalist and Public Opinion Newspaper, Ms. Kim Loan, a resident living and working in Hanoi , shared that the 2% reduction in VAT is relatively small and it is very difficult to feel this policy.
"I understand that the 2% VAT reduction policy will help people reduce their financial burden. However, as an ordinary consumer, I have not really felt how this policy will affect my life. For example, a 3kg bag of rice used to cost 120,000 VND, but now it is only 3,000 VND, or a box of instant noodles is only 4,000 - 5,000 VND," Ms. Loan said.
Not to mention, not all consumer goods are subject to a 2% VAT reduction.
Agreeing with this view, Mr. Vo Thanh An, leader of a textile enterprise, said that the VAT reduction policy supports businesses better than it does ordinary individual consumers.
"For businesses, the VAT reduction policy has a huge impact, many raw material import costs are greatly reduced, this reduces pressure on businesses," he said.
Tax cuts mean budget cuts, but they are necessary.
Meanwhile, Dr. Vo Thi Van Khanh, Faculty of Business Administration, Academy of Finance, said that in Vietnam, the most common VAT rate for goods is 10%. That is, a common item that a business buys to sell already has 10% VAT. However, there are also some cases where special goods are only subject to a tax rate of 5%, or even 0%.
According to Ms. Khanh, the 2% reduction in VAT means a reduction in state budget revenue. Accordingly, with the two reductions in VAT from 10% to 8%, it is expected to reduce state budget revenue by about VND80,000 billion.
“VAT is a tax that is widely applied to almost all goods and services and has the widest impact on people's lives. Therefore, this tax reduction not only saves people's costs and stimulates consumption, but also promotes investment and removes difficulties for businesses due to the impact of the COVID-19 pandemic,” said Dr. Vo Thi Van Khanh.
Tax cuts mean budget cuts, but they are necessary. (Photo: PO)
According to Ms. Khanh, in addition to the solutions that have been and are being implemented for 2023, such as extending the deadline for tax and land rent payment; reducing land rent; reducing environmental protection tax on gasoline and oil products, continuing to reduce VAT as applied in 2022 to support businesses and people is necessary.
“This creates conditions for recovery and promotion of production and business activities and creates momentum for economic growth in the current difficult context, contributing directly and indirectly to maintaining jobs, workers' income and new revenue sources for the state budget,” Ms. Khanh emphasized.
In fact, VAT is an indirect tax, included in the selling price of products, goods and services. Therefore, when the tax is reduced, the price of goods and services will decrease, thereby helping people buy more goods with the same amount of money.
In addition, the positive impacts of reducing VAT from 10% to 8% also help businesses reduce capital expenditure to pay VAT when purchasing raw materials, fuels, materials and other input factors in a capital turnover cycle.
“That means businesses will save financial resources equivalent to about 2% (equal to the tax reduction rate) of the total purchase turnover of the business. This amount will be reinvested, promoting production and business development,” said Ms. Khanh.
To enjoy tax reduction, businesses need to identify product codes eligible for VAT reduction; adjust pre-printed prices on stamps, tickets, cards at tourist areas, checkpoints...
In short, the 2% reduction in VAT is and will benefit businesses and people, giving the economy more motivation to recover, demonstrating the most practical, direct and effective support and sharing from the state.
"At the same time, it requires the Ministry of Finance and relevant agencies to continue reforming and modernizing the tax system, simplifying tax administrative procedures, strengthening the effective implementation of tax laws and state revenue management to prevent revenue loss, transfer pricing, tax evasion... to compensate for the shortfall in state budget revenue due to tax reduction...", Ms. Khanh added.
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