“Raising the amount of non-taxable income from independent professional practice of individuals from VND100 million a year to VND150 million is very suitable. But, it is unreasonable to collect 10 percent of income of a person with an income of VND151 million a year. It is more appropriate to collect the tax on the excess value of VND150 million,” said Nguyen Thi Cuc, President of the Vietnam Tax Consultants Association, at a workshop that collected opinions of enterprises for the draft law on amendments and supplements to a number of articles of laws on tax. The event was held by the Vietnam Chamber of Commerce and Industry (VCCI) in cooperation with the Ministry of Finance in Hanoi.
The draft law on amendments and supplements to a number of articles of laws on tax intends to modify 27 contents in seven existing tax laws: Law on Corporate Income Tax (CIT), Law on Personal Income Tax, Law on Value Added Tax, Law on Special Consumption Tax, Law on Use of Non-agricultural Land, Law on Environmental Protection, and Law on Tax Administration.
Specifically, the Ministry of Finance proposed amending and supplementing nine contents in the Law on Corporate Income Tax, four contents in the Law on Personal Income Tax, three contents in the Law on Value Added Tax, three contents in the Law on Special Consumption Tax, one content in the Law on Use of Non-agricultural Land, one content in the Law on Environmental Protection, and six contents in the Law on Tax Administration.
The ministry said these amendments and supplements aim to ensure the consistency of policies. Changes will be made to shortcoming contents and unclear contents to facilitate law enforcement, create favourable conditions for tax payers, speed up public administration reform, modernise tax administration, and prevent trade fraudulence and State budget losses.
Automobile tax heated up
One issue drawing much interest is changes in special consumption tax on automobiles. According to Mr Pham Dinh Thi, Director of Tax Policy Department under the Ministry of Finance, the Prime Minister asked the Ministry of Finance to formulate plans for modifying regulations on corporate income tax and special consumption tax under which the special consumption tax rate will be lowered gradually on small automobile lines while raised on models with large capacity and fuel consumption. Besides, softer rates of corporate income tax than current rates will be applied to large-scale projects manufacturing prioritised vehicles and important items. 10 percent corporate income tax will be imposed in 15 years, a zero tax will be levied in four years, and a 50 percent discount will be subjected in nine following years (beneficiaries are manufacturers of prioritised vehicles meeting criteria of capital, employment and disbursement speed; new investment projects manufacturing important parts like engines, transmission drives, gearboxes, etc.).
Excise tax rates are more itemised from the current ruling. Accordingly, special consumption tax is reduced on priority vehicle development while high duty is levied on nines of up to nine seats with displacement capacity of over 3 litres of fuel consumption as large vehicles are suitable for transport infrastructure conditions, incomes of people.
Thus, many vehicles will enjoy lower special consumption rates from the current ruling. The highest excise tax rate is just 75 percent.
According to calculations, if the draft law is passed, the State Budget will lose VND1,200 billion in taxes from automobiles alone. However, according to Mr Thi, changes to special consumption tax on automobiles aim to ensure consistence with the country’s automotive industry development strategy, encourage production and consumption of smaller cars which consume less fuel and fit transportation infrastructure and people's income.
More suitable tax payment forms needed
According to Ms Cuc, the Law on Tax Administration imposes obligations of taxpayers on compulsory electronic tax declaration and electronic tax payment. This should only impose on businesses with legal status while it is very hard to apply to 1.6 million individual business households. Thus, he said that electronic tax payment should be encouraged. Taxpayers can choose suitable tax payment methods for them.
Mr Nguyen Ngoc Long, a tax consultant at VCCI, said the draft law puts forth a 50 percent reduction of personal income tax on high-tech individuals working in high-tech parks, very necessary since Vietnam is on the way of integration and the high-tech industry will become a strong point of the country. However, proposed amendments and additions in the draft will not really facilitate enterprises.
Besides, he added that in the draft Law on Corporate Income Tax, the restriction of borrowing costs arising from loan interests on businesses with loans in excess of equity capital.
Mr Thi said that this draft will be presented to lawmakers at the National Assembly’s gathering in October for consideration. Thus, the ministry will collect feedback and opinions from enterprises and citizens.
Quynh Anh
Vietnamese
