Taxes should encourage entrepreneurship.

The core objective of tax administration is to create a level playing field for businesses, while also facilitating a secure and comfortable environment for individuals and businesses to operate.

Over 5 million business households will have to switch from flat-rate tax to a method of declaring and paying taxes based on actual revenue - Photo: QUANG DINH

Professor Hoang Van Cuong, a member of the National Assembly's Economic and Financial Committee, affirmed this when speaking with Tuoi Tre newspaper about the revised Law on Tax Management, which is expected to be discussed and passed by the National Assembly at next week's session.

Mr. Cuong said: "Businesses, households, and individuals engaged in business, or generally speaking, those involved in business, when making profits from their production and business activities, must be responsible for declaring and fulfilling their obligations fully. Meanwhile, tax management must contribute to helping people and businesses feel secure in investing in production and business."

We need to digitally transform the way we manage taxes.

Professor Hoang Van Cuong

* In your opinion, what kind of tax management would create peace of mind for businesses and citizens?

- Before we adopted information technology and digital transformation, businesses had to declare and store information on paper, then queue up to buy invoices from the tax authorities, and prepare reports to send to the tax authorities. But now, in the era of the 4.0 revolution, everything can be digitized.

In fact, in recent years, tax procedures such as declaration, invoicing, tax payment, and tax refunds have all been carried out electronically. Businesses no longer need to maintain traditional ledgers for input, inventory, sales, purchase prices, accounts receivable, etc., as the data is entered into management software. Typically, large businesses and corporations, when selling goods and receiving payment, must issue electronic invoices and connect with the tax authorities.

For businesses, tax management may not change much now that everything is almost digitized. But the method of tax management will change significantly for household businesses – a crucial force in the economy. Resolution 68 of the Politburo on the development of the private economy emphasizes ending the lump-sum tax system in 2026. Thus, more than 5 million household businesses will switch from lump-sum tax to tax declaration.

This means that businesses selling goods will issue electronic invoices, pay taxes based on actual sales revenue, and use sales software instead of manual record-keeping as they have done for so long. When selling a lighter, a packet of instant noodles, a box of pastries, etc., the seller simply needs to put the goods into the cash register. The machine will identify the item, unit price, quantity, and the total amount the buyer has to pay.

The software automatically calculates and prints out a receipt, which is considered an invoice. Immediately, information about the order value is also sent to the tax authorities. Once the revenue information is available, the system automatically calculates the monthly tax amount that the business owner must pay. This allows the business owner to focus on production and business without having to worry about filing tax returns and reports with the tax authorities.

Household businesses will operate more professionally.

* What benefits do business owners, especially household businesses, gain from switching to tax declaration?

- More importantly, the shift from manual record-keeping to using sales software helps producers and businesses manage their operations more conveniently and professionally.

All information, from incoming goods, quantities, and unit prices to sales and incurred costs, is now available on computers and smartphones, eliminating the need for manual record-keeping as in the past. This allows business owners to assess business performance and expand their operations. This is precisely the goal we aim for: transforming household businesses into enterprises.

For the governing body, the entire management process, including tax management, must be digitized. The state will be able to manage taxes in a way that those with successful businesses pay higher taxes, while those with losses do not have to pay taxes. This creates transparency and openness in tax management.

Once the system is digitized and technology is applied, the tax authorities can manage data through a database, thereby detecting unusual occurrences such as importing 10 dong and selling it for 100 dong, and only need to investigate these suspicious cases.

This management approach will also encourage businesses and individuals to conduct their business honestly, in accordance with regulations, and confidently develop their production and business activities. I would also like to add that although initially implementing digitalization for household businesses may be unfamiliar and even challenging when using the software, it is still a positive step.

But in the long run, revenue and taxes from selling a pack of toothpicks, a lighter, etc., will also be digitized. At the end of the month, from the data on the system, the software will automatically calculate the total revenue and the amount of tax that business A has to pay for the month. The business doesn't have to declare or report anything; they just need to check the information and pay the tax.

With such a simple method, in my opinion, no business owner would even think about evading taxes.

* But many businesses are worried they will have to pay more taxes when they switch to the declaration-based tax system, sir?

- The goal of switching to a declaration-based tax system, as I mentioned above, is to help businesses operate more professionally and create a transparent, healthy competitive business environment, not to collect more taxes.

Because taxes are based on actual revenue, businesses with high revenue and efficient operations are willing to contribute. The challenge lies in calculating appropriate tax rates and revenue thresholds to encourage compliance.

If tax rates and thresholds are so inadequate that people feel compelled to pay, they may consider tax evasion or avoidance.

The taxable revenue threshold must be between 1 and 2 billion VND.

* In your opinion, what is an appropriate revenue threshold for tax purposes for household businesses?

- Determining the tax threshold for tax declarations in the near future is a very important issue. According to the Value Added Tax Law, from 2026, the taxable revenue for household and individual businesses will be 200 million VND/year, meaning that only revenue exceeding 200 million VND will be subject to tax.

Personally, I think this amount is low. Because with personal income tax, taxpayers with income from wages and salaries are entitled to deductions for themselves and their dependents (if any), and only income exceeding this amount is subject to tax.

According to current regulations, the tax deduction for taxpayers is VND 11 million/month and for dependents VND 4.4 million/month. The proposed increases are VND 15.5 million/month and VND 6.2 million/month, respectively. This would result in an annual deduction of VND 260.4 million for a taxpayer with one dependent. Only income exceeding this amount would be subject to tax.

To ensure fairness among taxpayers, for a household business with an income of 260 million VND, the revenue threshold for tax calculation should be much higher, around 1-2 billion VND, not 200 million VND as stipulated in the Value Added Tax Law. Typically, a household business has at least two employees. Therefore, the revenue threshold for a household business should be doubled to encourage business owners to operate with confidence and to ensure fairness among taxpayers.

Furthermore, in my opinion, revenue thresholds should be divided by industry and business sector. In reality, some businesses sell goods with very high import costs, such as several hundred thousand dong for a box of powdered milk or a case of beer, but only make a profit of 15,000-20,000 dong. The profit margin on revenue is very low; they mainly just cover their labor costs.

Meanwhile, for service providers such as hairdressers and barbers, input costs are not as high as those for selling goods, so income can be 30-40%, or even 50% of revenue. Therefore, it is necessary to define revenue thresholds according to industry and have appropriate tax rates.

The method of tax administration will change significantly.

According to Mr. Hoang Van Cuong, the goal set by Resolution 68 of the Politburo on the development of the private economy is to have at least 2 million businesses nationwide by 2030 and 3 million operating businesses by 2045.

Therefore, the general method of state management, and tax management in particular, must promote digital transformation and the entrepreneurial spirit of businesses and citizens. Accordingly, taxation must first be a tool to regulate business practices; those that encourage such practices should be subject to preferential tax rates, or even tax exemptions.

Conversely, business activities, goods, and services that need to be restricted will be subject to higher taxes. And the second objective of taxation is to generate revenue for the budget.

Many experts believe that the taxable revenue threshold should be raised to 1-2 billion VND/year to be appropriate - Photo: QUANG DINH

The minimum personal allowance must be 17 million VND per month.

* At the National Assembly session opening this month, the draft revised Personal Income Tax Law will be discussed and passed. In your opinion, should the personal allowance be increased to reduce the burden on taxpayers?

- In principle, the personal allowance must ensure that taxpayers can cover their most essential expenses such as food, housing, clothing, transportation, education, etc., meaning it must be enough to live on. In reality, over the past five years, the consumer price index has increased by about 20%, along with a significant increase in the average income of workers.

Therefore, the personal allowance for taxpayers should be raised to at least 1.5 times the current regulation of 11 million VND/month. This would bring the total allowance to around 16.5 - 17 million VND/month. This is the minimum amount; a higher amount would be even better.

And the dependent allowance is also a concern. From 2020 to the present, the regulation of 4.4 million VND/month to support a school-aged child is insufficient; it needs to be increased 1.5 to 2 times, to 7-9 million VND/month. Since dependents are primarily school-aged children, in addition to regular food expenses, a child needs to learn a foreign language, develop talents, and acquire life skills. This is an investment in the future, in the country's high-quality workforce, so the policy shouldn't be overly restrictive.

When a minimum standard of living is guaranteed, taxpayers will expand their investments and business operations, and the profits they earn will lead them to contribute more to the budget. Therefore, to create a sustainable source of revenue, tax policies and tax management methods need to nurture revenue sources and encourage the entrepreneurial spirit of businesses and individuals.

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LE THANH - THANH CHUNG

Source: https://tuoitre.vn/thue-phai-thuc-day-tinh-than-kinh-doanh-20251016074633063.htm