Clearly specify deduction conditions to avoid businesses being "tax suspended"

Discussing at Group 16 (including the National Assembly delegations of Da Nang City, Tuyen Quang and Cao Bang provinces), some National Assembly delegates noted that the boundary between "not subject to tax" and "not subject to tax" is currently very vague, and if not clarified, it will lead to arbitrary interpretation. Therefore, there should be a provision assigning the Government to clearly stipulate the conditions for deduction, to avoid businesses being "taxed" due to inconsistent application.

Vice Chairman of the National Assembly Nguyen Duc Hai attended the discussion at the Group. Photo: Pham Thang

Discussing in groups, National Assembly deputies agreed to add the draft Law amending and supplementing a number of articles of the Law on Value Added Tax to the agenda of the 10th Session.

The reason is that, according to the Government's Proposal, the scope of this amendment and supplement to the Law on Value Added Tax is not much, only related to Articles 5, 9 and 14, but will have a direct impact on millions of farming households, cooperatives as well as many enterprises in the agricultural production chain of our country. In the conditions of storms and floods that have severely affected many provinces and cities across the country in recent times, the amendment and supplement of some contents in the Law on Value Added Tax will contribute to the early restoration of production and business activities, especially in the agricultural sector.

Submitting this Law project to the National Assembly for consideration and approval at the Tenth Session is also consistent with the provisions of Clause 2, Article 26 of the Law on Promulgation of Legal Documents on promulgating laws at the ongoing National Assembly session "to immediately resolve urgent issues, difficulties, and inadequacies arising from practice".

National Assembly Delegate Ma Thi Thuy ( Tuyen Quang ) speaks at the Group. Photo: Pham Thang

Agreeing with the draft to expand the subjects not subject to value added tax on unprocessed agricultural, forestry and fishery products when businesses and cooperatives sell to each other, National Assembly Deputy Ma Thi Thuy (Tuyen Quang) said that this is an appropriate step to reduce intermediary costs and remove obstacles in deduction and declaration.

However, delegates noted that the concept of “normal preliminary processing” continues to be unclearly defined in this amendment and supplement to the Law on Value Added Tax. While this has been a point of controversy for many years, it has led to a situation where the same type of goods are applied differently by each locality; businesses are always in a state of both declaring and worrying about the risk of being taxed.

Assigning the Ministry of Finance to provide detailed regulations without specific principles in the law can easily lead to arbitrary interpretations, even administratively expanding or narrowing the scope. Therefore, delegates suggested that the principles should be stipulated in the law, at least defining the criteria for identifying unprocessed products to ensure policy stability.

Regarding the amendment of Clause 5, Article 9, delegate Ma Thi Thuy found that the regulation that waste, by-products, and scrap are taxed at the correct rate is reasonable. "However, is this regulation enough to resolve the situation of buying and selling invoices and legalizing scrap for tax fraud?". Raising this issue, the delegate stated that in many high-risk areas - such as metal recycling and seafood - scrap is often a "blind spot" in tax management. "If we only amend the tax rate without tightening the control process, electronic invoices, and tracing of goods, the risk of revenue loss is still very high. Therefore, the drafting agency should re-evaluate the impact and supplement management tools, not just amend the wording like that," the delegate suggested.

Regarding the amendment and supplement to Clause 3a, Article 14 - input tax deduction for goods and services that are not subject to tax, delegates said that this is the biggest amendment and also has many potential consequences. Allowing the deduction of all input tax is theoretically positive, reducing capital costs for businesses.

Overview of the discussion at Group 16. Photo: Pham Thang

However, delegates noted that the line between “non-taxable” and “non-taxable” is currently very blurred. If not clarified, it will lead to arbitrary interpretations, with businesses declaring in a way that maximizes their benefits, while tax authorities apply the opposite interpretation. This is the source of a series of disputes over tax deductions and refunds over the years.

In addition, expanding input deductions may lead to increased tax refund pressure, creating additional fraud risks if there is no electronic checking mechanism and accompanying risk assessment. Therefore, delegates proposed adding a provision assigning the Government to clearly stipulate deduction conditions, avoiding cases where businesses are "taxed" due to inconsistent application.

Regarding the abolition of Point c, Clause 9, Article 15, delegate Ma Thi Thuy said that the abolition of some conditions on documents to simplify administrative procedures is in the right direction, but must go hand in hand with improving electronic monitoring capacity. "Otherwise, we will unintentionally create a "gap" for the act of legalizing invoices and naturally open the way for fraudulent tax deductions and refunds," the delegate emphasized.

In addition, the delegate also frankly pointed out that currently, the capacity to analyze tax data in many localities is still limited, especially in mountainous, remote and isolated areas. If the conditions are removed without solutions to increase supervision, the risks will be greater than the benefits.

Source: https://daibieunhandan.vn/quy-dinh-ro-dieu-kien-khau-tru-tranh-de-doanh-nghiep-bi-tréo-thue-10399623.html