Amending the VAT Law, what is the reasonable tax threshold?

The proposal to raise the threshold for VAT-taxable revenue to 200 - 300 million VND/year has received positive response. Illustration photo: General Department of Taxation

Regarding the revision of the draft Law on Value Added Tax (amended), the National Assembly's Finance and Budget Committee recently proposed raising the threshold for revenue subject to value added tax (VAT) from the current VND100 million to VND200 - 300 million/year. Accordingly, business households with revenue under VND200 million/year will not have to pay VAT.

This information has been positively responded by many experts and business households, as the current tax threshold of 100 million VND/year, effective since 2014, is no longer suitable for the current context.

Ms. Nguyen Thi Lan, owner of a grocery store in Cau Giay, Hanoi, said that her family's store is just a small-scale grocery store, mainly family members take turns selling goods to earn "a living, working for profit".

Ms. Lan also shared that the store business in the past 1-2 years is not as good as before: "Now everything can be ordered online, anything you have is available online, they also offer free home delivery, so traditional grocery stores like us are having a hard time now."

“Currently, the revenue of this grocery store is less than 200 million VND/year but is slightly more than 100 million/year, so I still have to pay about 400,000 VND in taxes every month. If the proposal to not impose VAT on business households with revenue under 200 million VND/year is approved, my store will be exempt from tax and save a significant amount of expenses,” Ms. Lan hopes.

Meanwhile, many people believe that the tax threshold for revenue from 200 million/year is still too low compared to the current situation of commodity prices and the market.

Mr. Nguyen Thanh Tung, (Tay Ho, Hanoi) gave an example, a bowl of pho/vermicelli cost about 25,000-30,000 VND 10 years ago, but now the minimum price has increased to about 35,000-50,000 VND. A regular meal is similar, from 20,000-25,000 VND 10 years ago, now it has increased to 35,000-40,000 VND/meal.

“Therefore, I think it would be more appropriate to raise the taxable revenue threshold to 300-350 million VND/year. If it is kept at 200 million VND/year, the revenue would only be about 16 million VND/month. After deducting input costs and goods, the remaining profit is very little, not enough to cover living expenses.”

Assessing the proposal to raise the threshold for VAT-taxable revenue to VND200-300 million/year, Mr. Dau Anh Tuan, Deputy General Secretary of the Vietnam Federation of Commerce and Industry (VCCI), said that raising the threshold for taxable revenue to VND200 million or VND300 million is reasonable. According to Mr. Dau Anh Tuan, the provisions of this proposal are very appropriate.

Previously, when giving comments on the Draft Law on Value Added Tax (VAT), some opinions proposed raising the taxable revenue threshold for households and individual businesses to VND150 million/year. However, VCCI said that this level is still relatively low and unreasonable.

Source: https://laodong.vn/kinh-doanh/sua-luat-thue-gtgt-nguong-chiu-thue-bao-nhieu-la-hop-ly-1385644.ldo