Commenting on the draft Law on Value Added Tax dated February 28, the Vietnam Federation of Commerce and Industry said: Article 5.25 of the Draft has raised the threshold for non-taxable revenue of business households and individuals. from 100 million VND/year to 150 million VND/year. This regulation will help many individuals and small business households not have to declare and pay taxes. However, According to many businesses, the taxable revenue threshold of 150 million VND/year is still relatively low.
“Comparing between business individuals and salaried individuals will show unreasonableness,” VCCI cited.
Currently, a salaried individual has a family allowance deduction of VND 132 million/year if there are no dependents, VND 184.8 million/year if there is one dependent, and if there are two dependents, it is VND 184.8 million/year. dependents is 237.6 million VND/year. With the assumption that on average each employee has one dependent, the taxable income threshold for salaried employees is currently higher than the value-added taxable revenue threshold of business individuals. Not to mention, in order to have revenue, business individuals will have to pay input costs while personal income does not have these costs.
Different sectors have different cost structures and tax rates, even though they may have the same revenue level. For example, in the field of commodity trading (such as retail and grocery stores) where input costs account for a large proportion of revenue, the income that business individuals enjoy is not large and the amount of tax collected is not large. from only 1.5 million VND per year. In the field of service provision, input costs are insignificant, the value added is larger and the tax payable is higher, the lowest 7.5 million VND/year.
For those reasons, VCCI recommends that the drafting agency consider amending the regulations on the taxable revenue threshold of business households and individuals as follows: Consider raising the taxable revenue level to about 180 to 200 million Dong per year. Along with that, consider classifying by industry similar to Article 12.2.b of the Draft on direct tax calculation method, for example, the distribution and supply industry has a higher threshold than the service and construction industry. …
