Why are 5 laws on tax required to be amended at the same time?

VCN – This is the first time that the Ministry of Finance has finalized a Bill amending and supplementing 5 laws on tax including Law on VAT, Law on special...

VCN – This is the first time that the Ministry of Finance has finalized a Bill amending and supplementing 5 laws on tax including Law on VAT, Law on special consumption tax (SCT), Law on corporate income tax CIT), Law on personal income tax (PIT) and Law on severance tax  (ST) to submit to the Government.

It is expected that in the third quarter of 2017, the Government will report to the National Assembly Standing Committee to include the Bill into the law and ordinance making program 2018 of the National Assembly according to the Law on issuing legal normative documents. If it is approved, the Bill may be applied from 2019.

Obstacles for enterprises removed

Mr. Pham Dinh Thi, Director of Tax Policy Department explained that the necessity of amendments and supplements to the five laws mentioned above is firstly to institutionalize the views and guidelines of the Party and policies of the State on perfecting the tax policies with the aim of restructuring the state revenues under Resolutions of Politburo and National Assembly and removing obstacles, facilitating enterprises to invest, operate and develop in accordance with Resolution 35/NQ-CP on supporting and developing enterprises by 2020.

In addition, through the actual implementation of laws over the past time, due to quick fluctuation of the economy and politics in the world in general and in Vietnam in private, the tax policies also exposed some shortcomings and exigencies that are required to be amended to comply with the reality and remove difficulties for production and business, enhance the competitiveness of enterprises and facilitate taxpayers. Mr. Thi also stated that another important reason for amendments to the five Laws on tax in this time is to implement the objective of reform and development of a unified tax system that matches with the international practice.

Therefore, the amendments and supplements to the Laws both institutionalize the views and guidelines of the Party and policies of the State and contribute to removing problems related to current laws on tax, ensuring the unification of the legal system and removing difficulties for enterprises

31 contents amended and supplemented

Sharing the basic orientation of the Bill, Mr. Thi noted that: the Law on VAT focused on 7 contents. In which, the notable content is that the drafting board transfers fertilizers, machinery, equipment for agriculture and offshore fishing boats subject to Non-VAT into entities subject to VAT and supplements a regulation that enterprises manufacturing goods and supplying services subject to 5 % VAT with input VAT which has been not deducted up after 12 months or 4 quarters shall be refunded. The ordinary VAT rate increases from 10% to 12%.

The Law on SPT concentrates on 4 contents: adding sugary drinks to entities subject to a SPT rate of 10% from 2019 in order to expand the collection basis and comply with international practice; besides increasing the SPT rate for cigarettes from 70% at the current time to 75% by 2019, it is suggested to add an absolute SPT rate of 1, 000 VND per 20-cigarette pack and 1,500 VND per cigar from January 01, 2020; imposing a SPT rate equal to 60% of the tax rate for a car of same capacity; removing domestic factors from the SPT price for cars of 9 seats or fewer to carry out the automotive industry development strategy.

The Ministry of Finance expects to amend and supplement 8 contents in Law on CIT. Firstly, reducing CIT for small and medium enterprises (SMEs) to satisfy and comply with Law on supporting the SMEs, which has been issued by the National Assembly. In detail, microenterprises are subject to a tax rate of 15%; SMEs are subject to a tax rate of 17%. Revenue used to determine the enterprise subject to the tax rate of 17% or 15% is the total revenue of that enterprise in a year. In addition, in order to remove difficulties for enterprises, the drafting agency introduces a simple method of VAT and CIT payment for micro enterprises and amends a regulation on the tax rate for foreign contractors and compensation for income from the transfer of real estate on loss from production and business activities when determining income subject to CIT.

For the Law on PIT, the Ministry of Finance also proposed to amend 8 contents, including: supplementing a regulation on not collecting PIT for incomes from share profits of members of agricultural cooperatives and farmers signed contract with enterprises joining “Big Field’; a regulation on exemption from PIT for some special subjects that are currently implementing the Decrees and Decisions to ensure the systematic manner and uniformity; a regulation on PIT reduction for a number of hi-tech staff working in the field of information technology, agriculture and agricultural product processing. In particular, supplementing a regulation that income from copyright including income from transfer of internet resource use right under the law on telecommunications is subject to tax.

The Law on severance tax is amended and supplemented to unify with relevant regulations. The Ministry of Finance proposes to amend and supplement a regulation on severance taxpayers for small exploitation; a regulation on the natural resource output subject to tax for natural water; a regulation on severance taxable price for natural water used for hydropower generation and severance taxable price for natural resources exploited for export.


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