The Ministry of Finance has just received a dispatch on the proposal to amend the value-added tax law, the excise tax law, and the corporate income tax law after 2022 from the Vietnam Federation of Trade and Industry (VCCI).
According to VCCI, value-added tax (VAT) is levied on the stage of a product, from production, circulation to consumption, and thus has a great socio-economic impact. Businesses highly welcome Resolution No. 43/2022/NQ15, approved by the National Assembly with fiscal and monetary support solutions, including the reduction of VAT in 2022 for most goods. and services (reduced from 10% to 8% by the end of 2022).
Therefore, VCCI recommends that this policy be maintained after 2022 for areas heavily affected by the recent Covid-19 pandemic such as tourism, hotels, aviation, logistics, etc.
For other goods and services, VCCI recommends that the Government consider stabilizing VAT rates so that businesses can recover and develop sustainably.
Accordingly, the VCCI said that the current VAT law still stipulates that many types of goods are not subject to VAT such as cultivation, livestock, aquaculture, and unprocessed fishing, etc.
This means that domestic enterprises producing this type of goods for domestic consumption are not entitled to deduction and refund of input VAT. Input costs such as raw materials, energy, advertising, site services, warehousing, transportation services, all have input VAT but are not deductible.
“This regulation makes businesses in the above fields face a lot of disadvantages,” VCCI said.
Meanwhile, imported goods enjoy a 0% tax rate in the exporting country and are not subject to VAT in Vietnam, thereby having tax advantages over domestically produced products. Invisibly, this regulation encourages imports, going against the policy of encouraging domestic production.
In addition, this method of tax calculation also leads to a reduction in the motivation for specialization and division of labor in these areas of production. Because the less an enterprise purchases and uses goods and services purchased from outside, the less non-deductible VAT will be and the more tax benefits it will receive.
Therefore, it is proposed to research, minimize the range of non-taxable items, and convert those items to taxable items, with a tax rate depending on the policy objective, possibly 0. % or 5%”, VCCI recommends.