2% VAT reduction, subject to price declaration businesses awaiting instructions

DNHN - By a resolution of the National Assembly, the VAT rate on several items with a 10% rate will be reduced to 8% on July 1, 2023. Among these are goods managed by the government, whose prices have been declared and registered by businesses...

Proposing to supplement regulations to guide price management cases involving VAT reductions

In the dispatch just sent to the Ministry of Finance for comments on the Draught Decree stipulating the 2% value-added tax reduction policy by the joint resolution of the Fifth Session, the XV National Assembly and VCCI outlined a series of cases where additional instructions are required to ensure a smooth implementation.

Currently, a variety of goods and services are subject to price management measures such as state-set pricing, price registration, price declaration, and price listing. The policy of reducing the value-added tax from 10% to 8% on July 1, 2023, and increasing it from 8% to 10% on January 1, 2024, will have an impact on the implementation of price management measures such as those listed above, according to VCCI.

Specifically, businesses that have declared prices and registered prices (tax included) want to know if, after July 1, 2023, they must reduce prices by 2% to reflect the tax cut. The previous prices still apply. Does the business need to declare and register the adjusted price and comply with any processes and procedures?

During the implementation of this policy the previous year, businesses discovered some difficulties that are challenging to implement in practice and require guidance.

For instance, some goods and services can be reduced by 2% with relative ease, while others whose prices have been rounded for convenience of payment cannot have their prices reduced by the same amount. For instance, if a postal and delivery company has declared a price of 5,000 VND per kilometer and it must be reduced to 4,909 VND per kilometer, it will be very difficult.

In light of these considerations, the VCCI proposed that the drafting agency supplement the regulations governing the cases in which prices are managed when reducing VAT so that businesses are exempt from price adjustment procedures and permitted to apply prices. declared and registered.

Classifying which goods and services qualify for the 8% or 10% tax rate is too complicated.

Concerning the list of goods and services that do not qualify for a value-added tax reduction, VCCI also raised several issues that require clarification, based on the actual implementation of the Resolution 43/2022/QH15-mandated VAT reduction.

The agency that drafted the Decree was also aware of this circumstance, including the method for determining the value-added tax reduction on goods and services; The description of goods in the Appendix of Decree 15/2022/ND-CP is based on the current List of Vietnam's product industry system and does not match the description of goods in the List of Vietnam's imports and exports. causing difficulty in determining HS codes for imported goods in the Appendices, particularly for lines containing descriptions of "goods... not yet classified."

Businesses informed VCCI that the classification of goods and services eligible for the 8% or 10% tax rate under Decree 15/2022/ND-CP is overly complex and risky.

Businesses do not know if they are doing it correctly or incorrectly. In many instances, two businesses purchase and sell goods jointly, but they cannot agree on whether to apply the 8% or 10% tax rate, rendering the contract impossible. The tax authorities and customs authorities are also uncertain about the classification of goods and services to apply, according to VCCI. According to a representative of the business community, because state agencies can interpret regulations differently, this even poses a risk of harassment and negativity during business inspections.

There is a plan to include the provisions in the Draught. "The HS codes in Appendix I and Appendix III are for lookup purposes only. The determination of HS codes for imported goods must adhere to customs law. However, according to VCCI, Appendix I and Appendix III still contain instances where HS codes are unavailable but marked with an asterisk (*), and HS codes will be declared based on the actual imported goods.

This is what makes it difficult for businesses to import goods, as there is no way to determine if their products (with HS code when imported) are included in the Appendix. According to the VCCI, many businesses advocate using the customs law taxonomy of imported goods as the basis for Appendix I and III of this Decree, rather than the Industry System. Vietnam economy. This solution can facilitate the determination of the tax rate for imported goods, as opposed to the current situation, in which both imported and domestic goods have difficulty determining the tax rate.

"If the classification table for imported goods cannot be used promptly, it is necessary to list all HS codes for imported items subject to a 10% tax. In other words, it is necessary to remove all exceptions denoted with an asterisk (*)", stated VCCI in a letter to the Ministry of Finance.

According to the Joint Resolution of the Fifth Session of the XV National Assembly, the period of a 2% reduction in the value-added tax will last until the end of 2023, excluding several commodity groups including telecommunications, information technology, and activities. Goods and services subject to excise tax include banking, securities, insurance, real estate, metals, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, and chemical products.

This policy to assist individuals and businesses is anticipated to achieve the desired goal of stimulating consumption, thereby accelerating the recovery of production and business activities...

Nghe Nhan (Synthesis)