Deputy Prime Minister Ho Duc Phoc explains to the National Assembly. Photo: National Assembly

As businesses become stronger, tax payments will increase

Discussing in the hall about the draft Resolution of the National Assembly on VAT reduction in the afternoon session of November 28, 2024, deputy Nguyen Quang Huan (Binh Duong delegation) expressed his attitude to the Government for paying attention to the business community and proposing to the National Assembly to extending VAT reduction.

This proves that the Government understand difficulties of domestic businesses and support them to develop.

However, concerning that this policy is only short-term, deputy Nguyen Quang Huan said that when businesses are only supported in the short term, they themselves may be affected in the long term.

“If we provide short-term support to get through a difficult period but the country’s economy goes down, businesses cannot develop, because businesses are a cell in the whole body of the country,” said Huan.

Therefore, according to him, businesses themselves want to receive support, but they want a long-term support policy.

Deputy Nguyen Van Than (Thai Binh delegation). Photo: National Assembly

Sharing the same view, deputy Nguyen Van Than (Thai Binh delegation), who is also the Chairman of the Vietnam Association of Small and Medium Enterprises, said that the Government's reduction of 2% VAT can be said to be very accurate.

According to him, VAT reduction does not mean losing revenue, but will increase the capacity of enterprises. When enterprises are stronger, the tax payment will increase. However, there needs to be more attention and support for small and medium enterprises.

According to deputy Ha Sy Dong (Quang Tri delegation), VAT reduction is an effective short-term solution, so there needs to be long-term synchronous measures to improve domestic production capacity, improve the quality of goods and especially increase competitiveness in the international market.

He also said that it is necessary to optimize budget revenue sources, the Government needs to develop and implement measures to increase budget revenue from sources other than VAT to compensate for this shortfall.

According to Dong, some notable revenues come from clean energy, electricity, wind power and solar power and extraordinary revenues combined with ensuring sustainable exploitation and compliance with environmental protection regulations.

In addition, according to deputies, in addition to tax reduction, the Government also needs to implement credit packages with preferential interest rates, human support and market support to help businesses improve their capacity.

Deputy Prime Minister Ho Duc Phoc said that Vietnam's VAT is still low. Photo: National Assembly

Vietnam's VAT is still very low

In a further explanation report to the National Assembly, Deputy Prime Minister Ho Duc Phoc also acknowledged that the 2% VAT reduction conflicts with the amended VAT Law as well as the 2025 budget estimate recently approved by National Assembly.

Therefore, after the 2% tax reduction, the Provincial People's Council and the Provincial People's Committee must be proactive in increasing revenue to ensure the assigned budget estimate, because it is a tax reduction, not a budget reduction.

The Deputy Prime Minister also stated that Vietnam's VAT is still too low, because the VAT in China, India, and Israel is still at 17%, while in many European countries it is up to 20-25%...

Therefore, localities, ministries, and sectors must make efforts to ensure the budget estimate, because in 2025, difficulties are not foreseen, especially issues related to exports, taxes from Customs...

Therefore, Deputy Prime Minister Ho Duc Phoc also said that the most important thing is how to make businesses stronger and more enthusiastic in contributing to the budget.

Therefore, there will be no budget deficits, the country does not need to borrow from foreign countries, from the people anymore, that is the goal to ensure sustainable development.

"We think that solving difficulties for businesses does not only rely on taxes, taxes are just one solution, if we want to solve difficulties for businesses, we must solve them with mechanisms and policies", the Deputy Prime Minister stated.

According to the Deputy Prime Minister, it is to remove obstacles in investment procedures, obstacles in production, business, licensing, solving land procedures, supporting credit packages, markets, human resources and technologies.

The Deputy Prime Minister stated that tax reduction would reduce the budget by about VND26,000 billion, divided among nearly 1 million businesses, it would only be about VND30 million per business, it is not too much, but this is also an encouragement for businesses make efforts to overcome difficulties.

Concluding the discussion session, Vice Chairman of the National Assembly Nguyen Duc Hai said that the National Assembly Standing Committee will direct the verification agency to closely coordinate with the drafting agency and relevant agencies to study the opinions of National Assembly deputies and necessary contents to be include into the session's resolution, and submit it to the National Assembly for consideration and decision.