Not only was the business license tax not abolished as requested by many businesses, it was converted into a business license fee and the collection rate was also increased 3 times - according to the draft decree of the Ministry of Finance that was just announced for comments.

The draft decree of the Ministry of Finance to convert business license tax into business license fee and increase the collection rate by 3 times is facing opposition from many businesses.

Increase to match minimum wage

Currently, business license tax is collected from two subjects with different rates. The first subject is enterprises, which must pay tax at four levels, equivalent to an amount from 1 million VND to 3 million VND/year, based on the registered business capital.

The second group is households and individuals doing business, paying taxes at 6 levels, from 50,000 VND to 1 million VND/year, based on monthly income. In particular, households and individuals doing business with income under 300,000 VND/month must also pay 50,000 VND in annual business tax.

Tax procedures at Ho Chi Minh City Tax Department

According to the draft decree of the Ministry of Finance, the state will not collect business license tax but will convert it into business license fee and the collection rate will also be adjusted. For enterprises, business license fee is still divided into 4 levels but the highest collection rate increases to 10 million VND, the lowest collection rate is 2 million VND/year. For households and individuals, business license fee is reduced to 2 levels based on annual revenue and revenue below 100 million VND/year does not have to pay tax. Thus, business license fee is adjusted to increase about 3 times compared to business license tax.

Explaining this change, the Ministry of Finance gave several reasons. Accordingly, the business license tax for business households is divided into 6 levels of collection, so every year, based on the average monthly income, the high collection costs are easily overlooked, and the function of counting the number of business establishments is not fully utilized. According to the provisions of the Law on Personal Income Tax, individuals with an income of less than 9 million VND/month, or less than 16.2 million VND/month if they have 2 dependents, do not have to pay personal income tax. Meanwhile, it is inappropriate for business households with an income of 300,000 VND/month to also have to pay business license tax.

In addition, the construction license tax is based on the minimum wage in 2002 of VND 290,000/month. Currently, the minimum wage has increased to VND 1.15 million (from May 1, it increased to VND 1.21 million), so determining the license tax level is not consistent with the change in salary.

May affect social psychology

It is noteworthy that the Ministry of Finance proposed to increase the business license fee in the context that the Government has a policy of tax exemption and reduction to support the business community. In particular, in October 2014, the Government agreed with the Ministry of Finance's proposal on the project to amend and supplement a number of articles of tax laws, including the content of abolishing the business license tax.

Having proposed to abolish the business license tax and not convert this tax into a fee because businesses are already burdened with taxes and fees at the National Assembly forum in June 2015, Ms. Nguyen Thi Nguyet Huong (National Assembly delegate from Hanoi, Chairwoman and General Director of Vietnam Development Investment Group) expressed concern when the Ministry of Finance still maintains the viewpoint of collecting business license fees. According to her, the nature of this collection is a fee, but it is necessary to consider what it serves for businesses. We must find a way to ensure that the fee schedule and charges approved by the National Assembly do not create additional fees and charges that people have to pay.

“I do not think that the business license fee should be based on the minimum wage. I also do not think that it is necessary to maintain this type of fee for inventory and quantity control because this is the function of the business licensing authority, not the tax authority. It is necessary to carefully assess the impact of increased revenue from the business license fee on the state budget and the level of impact on business operations. This revenue does not contribute much to the budget but can affect social psychology. By reducing taxes, fees and administrative procedures, businesses can operate better. In my opinion, before deciding to collect business license fees, the Ministry of Finance must consult businesses - the subjects affected by the policy, this is a general regulation" - Ms. Huong suggested.

According to Laborer