Draft Decree on Value Added Tax: Inadequacies that need to be adjusted and amended
(Baonghean.vn) - Currently, the Ministry of Finance is drafting a Decree detailing and guiding the implementation of a number of articles of the Law on Value Added Tax (VAT), replacing a number of related Decrees that have also amended and supplemented regulations on VAT refunds for investment projects; amending wording to ensure transparency and consistency with regulations in the Law on Value Added Tax, Law on Tax Administration, Law on Export Tax, etc.
The draft amendment will affect businesses that produce, trade, and import goods and services subject to VAT. To ensure the reasonableness and feasibility of the document as well as the rights and interests of businesses and affected subjects in the locality, it is extremely important and necessary to collect feedback from businesses in Nghe An, especially in the context of the Covid-19 pandemic showing no signs of ending, seriously affecting the business community.
Through implementationVAT policyThe current regulations on VAT policies have achieved positive results. Specifically: Removing obstacles arising in practice, contributing to supporting production and business activities, encouraging investment in technological innovation, contributing to promoting the real estate market, facilitating enterprises in developing technology, investing in innovation of fixed assets, encouraging exports, contributing to promoting social investment capital, growth, and reforming administrative procedures.
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| Packing corrugated iron products at Hoa Sen Nghe An Corrugated Iron Factory. Photo: Lam Tung |
Dr. Pham Thi Thuy Hang - Head of the Accounting Department, School of Economics, Vinh University said that during the implementation process, some regulations on VAT have revealed many shortcomings that need to be adjusted, amended and supplemented accordingly. Specifically, these are difficulties in implementing investment project transfer activities, determining taxable prices for real estate business activities, electricity trading; difficulties in applying VAT rates at the import stage for some products such as pesticides, growth stimulants for livestock and plants; difficulties arising from VAT refunds for investment projects.
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| Instructions for businesses to declare taxes at Nghe An Tax Department. Photo: Lam Tung |
With this regulation, enterprises are allowed to use one of two types of sales invoices: VAT invoices and regular sales invoices. In case an enterprise implementing the VAT deduction method has an economic relationship with an enterprise or individual business household implementing tax calculation using the direct method, both parties will suffer losses.
"For enterprises applying the deduction method to calculate VAT when purchasing goods and services of enterprises applying the direct method to calculate tax, even if there is a sales invoice (including VAT), it still cannot be used to deduct tax. Thus, for enterprises that have complied with the accounting regime, invoices, and complete documents, but in the reasonable costs forming the selling price of goods and services subject to VAT, there is still a part of input VAT that cannot be deducted. This means that output VAT is still being piled on top of VAT, causing damage to the enterprise."
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| Staff of the Declaration Department support tax declaration at Nghe An Tax Department. Photo: Lam Tung |
From another perspective, Mr. Dinh Van Tao - Director of the Joint Stock Company of the International Business Training Academy for Peak Success affirmed that tax is an important tool for the State to perform the function of macro management of the economy, in which VAT plays a very important role. This is a type of revenue tax levied on each stage of production, circulation of goods and finally the stage of consumption.
VAT is added to the selling price so consumers have to pay. VAT rates in some countries are quite high because their countries are developed, rich and fair. But some countries in the region have lower VAT rates than ours even though their standard of living is very high such as: Japan 5%, Singapore 7%... then our country's rate of 10%, compared to per capita income is also a problem while our people are still poor and have been seriously affected by the Covid-19 pandemic. Because it affects consumers, when VAT rates are high, it will limit purchasing power, hinder production and circulation of goods.
This draft Decree is extremely necessary and timely, but it is necessary to pay attention to the following issues: The Decree needs to be very detailed, with more specific measures that are closer to reality so that businesses voluntarily and consciously comply with tax laws, fully implement the invoice and document regime, and strictly handle tax violations. The legal system will thereby be increasingly improved and the implementation of the law will gradually become more orderly and disciplined, thanks to which consumers - who are subject to VAT - will benefit fairly and equally. Hopefully, the Draft will continue to remove difficulties for production and business activities, ensure publicity and transparency, and create more favorable conditions for people and businesses.