The Law on Value Added Tax stipulates that goods and services of business households and individuals with annual revenue of 200 million VND or less will not be subject to value added tax (VAT).

Before the National Assembly passed the report, on behalf of the National Assembly Standing Committee, Chairman of the Finance and Budget Committee Le Quang Manh said there was a proposal to consider raising the threshold of non-VAT revenue to above 200 million.

In addition, there are opinions suggesting a level of around 300 million or 400 million VND for the coming years.

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Chairman of the Finance and Budget Committee Le Quang Manh presented an explanation and received feedback. Photo: National Assembly

The Standing Committee of the National Assembly said that the current Law stipulates that the non-VAT revenue level is 100 million VND/year. According to calculations by the Ministry of Finance , if the non-taxable revenue level is set at 200 million VND/year, the number of tax-paying households and individuals will decrease by 620,653 households, and the State budget revenue will decrease by about 2,630 billion VND.

If the non-taxable revenue is 300 million VND/year, the number of tax-paying households and individuals will decrease by 734,735 households, and the budget revenue will decrease by about 6,383 billion VND.

To ensure a reasonable increase in the non-taxable revenue threshold, relatively consistent with the average GDP and CPI growth rate from 2013 to present, the Law stipulates a revenue threshold of VND 200 million/year.

The Government proposes to be assigned the authority to adjust this revenue level in accordance with the socio -economic development situation of each period, to ensure flexibility in management, consistent with reality.

This content was consulted by National Assembly delegates by ballot, with 204 delegates (accounting for 63.35% of the total number of National Assembly delegates) agreeing with the regulation that goods and services of households and individuals doing business with an annual revenue of 200 million VND or less are not subject to tax.

5% tax on fertilizers

The new law also stipulates a tax rate of 5% applicable to fertilizers, ores for fertilizer production, pesticides and animal growth stimulants as prescribed by law.

According to Chairman of the Finance and Budget Committee Le Quang Manh, many opinions agree with the proposal to impose a 5% tax rate on fertilizers.

Some opinions suggest keeping the current regulations (no tax rate); others suggest applying a tax rate of 0%, 1%, or 2%. Some opinions suggest comprehensively assessing the impact of this regulation on farmers and agricultural and aquatic production. Some opinions are concerned about the possibility of businesses taking advantage of the policy, raising prices, affecting farmers.

The Chairman of the Finance and Budget Committee said that if the regulation applies a 0% tax rate to fertilizers, it will ensure benefits for both domestic fertilizer producers and importers because they will be refunded the input VAT they have paid and will not have to pay output VAT. However, every year the State will have to spend the budget to refund taxes to businesses.

Applying a 0% tax rate to fertilizers is also contrary to the principles and practices of VAT, which is that a 0% tax rate only applies to exported goods and services, not to domestic consumption.

In addition, applying this direction will break the neutrality of tax policy, create a bad precedent and be unfair to other manufacturing industries.

The regulation of a 1% or 2% tax rate on fertilizers is also inconsistent with the VAT reform objective of reducing the number of tax rates, not increasing the number of tax rates compared to current regulations.

On November 26, the Secretary General of the National Assembly sent a request for opinions from National Assembly deputies on two options: one is to apply a 5% tax rate, the other is to keep it as it is (no VAT).

72.67% of the total number of National Assembly delegates agreed to impose a 5% tax rate on fertilizers, machinery, specialized equipment for agricultural production, and fishing vessels.

Applying 5% VAT on fertilizers, each farmer pays an additional 38,000 VND/month

Applying 5% VAT on fertilizers, each farmer pays an additional 38,000 VND/month

Minister Ho Duc Phoc said that when levying a 5% VAT on fertilizers, if calculating the tax refund for businesses of 1,500 billion VND, and the remaining 4,200 billion VND, assessing the impact on 9.1 million people, each farming household will pay an additional 461,000 VND per year, and an additional 38,000 VND per month.