Taxes should truly be a tool for protecting the economy.

At the end of the discussion session on the draft Law on Value Added Tax (amended) on June 24th, Minister of Finance Ho Duc Phoc provided explanations and clarifications on several issues raised by National Assembly deputies.

VAT has a very broad scope of regulation.

Minister Ho Duc Phoc stated that VAT has a very broad scope of regulation and is levied on almost all types of goods and services, thus affecting the interests of many producers and businesses.

Therefore, the regulations in the draft Law need to ensure the development of production and trade, thereby establishing unified regulations in accordance with the Tax Strategy as outlined in the Party's Resolution. The drafting committee has conducted thorough research and assessed the impact of each issue related to VAT policy, encompassing all revenue sources and aligning with international practices.

The Minister stated that, according to the strategy, by 2030, 16-17% of GDP must be mobilized into the budget, of which taxes and fees account for 14-15% of GDP; the domestic revenue ratio must reach 86-87%.

"Based on the opinions of National Assembly deputies, the drafting agency will take them into account, listen to the opinions, and reassess the impact of each policy package and the issues still under debate to ensure consensus when promulgating them at the next session," Mr. Phớc said.

Minister of Finance Ho Duc Phoc gives an explanation (Photo: National Assembly Media).

In explaining several issues raised by delegates regarding the regulation that assigns the Government the authority to specify goods and services for households and individuals that are exempt from VAT, the Minister stated that the regulations in the law must ensure compliance with global trends.

"Taxation should truly be a tool to protect the economy and must adapt to the leadership, management, and governance of the economy, especially macroeconomics," Mr. Phuoc said, adding that decentralization to the government is extremely important and ensures flexibility and efficiency in governance.

The Minister argued that the tax-exempt revenue threshold needs to be calculated in balance with inflation, CPI increases, as well as wage increases and other costs. For example, a threshold of 100 million VND might be set at this time, but it could be adjusted to 150 million VND next year, and 200 million VND the year after that... Therefore, entrusting the government with the authority to regulate this would provide greater flexibility.

According to the Minister, before advising the Government, the Ministry of Finance must conduct a comprehensive assessment, from the CPI index to various goods, to issues such as wage increases, currency devaluation, and the impact of exchange rates… only then can appropriate regulations be formulated.

"If the above content does not delegate authority to the Government but stipulates the authority of the National Assembly Standing Committee, then the implementation steps will involve more stages and procedures, and it will take at least six months to amend the policies," Mr. Phớc said.

Fertilizer prices are not only affected by taxes.

Regarding the regulations on tax rates for fertilizers, many opinions suggest that a 5% tax should not be applied, while there are quite a few opposing views. The Minister stated that during the period from the drafting of the VAT Law in 2008 to 2013 and 2014, fertilizers were included as a taxable item at 5%, but were later removed from the taxable list.

According to the Minister of Information, currently, domestic fertilizer production accounts for 73.3%, while imports account for 26.7%. The 5% tax rate will not create inequality between domestic and importing businesses. Furthermore, VAT refunds will provide resources for businesses to continue investing in technological innovation, lowering production costs, and achieving sustainable development.

According to the Minister, fertilizer prices are affected not only by taxes but also by the supply and demand of goods; if the supply increases, prices will be lower, and conversely, if the supply is low, prices will be higher.

Discussion session on the amended Value Added Tax Law on the afternoon of June 24 (Photo: National Assembly Media).

Regarding the issue of VAT on low-value imported goods, the Minister informed that this is currently implemented according to Decision No. 78/2010 of the Prime Minister, based on international agreements. However, many countries have now abolished this regulation.

For example, the EU has abolished the VAT exemption for shipments worth 22 Euros or less; the UK has removed the VAT exemption for imported goods valued at 135 British pounds or less; and Thailand has implemented a 7% VAT rate on all imported goods...

Regarding the issue raised by the delegates concerning taxable real estate businesses, the Minister clarified that land use fees and land lease fees are not subject to tax. However, real estate businesses must invest in inputs such as infrastructure, equipment, and materials. While input tax deductions are allowed, output VAT must be paid; otherwise, input tax deductions are not permitted.

Regarding expansionary fiscal policy, the Minister stated that this policy should be completed by the end of 2024, and the focus should shift to implementing a tight fiscal policy, in line with current trends, to strengthen public finances and concentrate on development investment and social welfare.

The Minister affirmed that the drafting agency will continue to listen to and incorporate the opinions of National Assembly deputies, assess the impact of each policy and the remaining debated issues in order to further refine the draft Law .

Source: https://www.nguoiduatin.vn/bo-truong-tai-chinh-thue-that-su-phai-la-cong-cu-bao-ve-nen-kinh-te-a669795.html