VAT reduction should be maintained in 2023: VCCI

Fri, 25 Nov 2022 23:23:00  |  Print  |  Email   Share:

The Vietnam Chamber of Commerce and Industry has said that a 2 per cent decrease in VAT should be sustained through next year.

Dau Anh Tuan, deputy secretary general of the Vietnam Chamber of Commerce and Industry (VCCI), said that the tax cut was one of the measures that must be sustained this year.

According to a spokesman for the VCCI, the policy can be rapidly implemented without requiring complex procedures or awaiting document approval.

"Personally, I believe it is still prudent to continue lowering the VAT by 2 per cent in 2023," Dau Anh Tuan told VIR.

VAT reduction should be maintained in 2023: VCCI
Deputy secretary general of VCCI Dau Anh Tuan, in "Weekly Dialogue" at VIR

The VCCI representative provided several justifications for this proposal. In the aftermath of the epidemic, companies and individuals encounter several obstacles. Also, as there is a danger of inflation, this is a constructive move to help lessen that risk.

Third, the evaluation of the impact of the tax reduction policy in 2022 is excellent. In terms of economic recovery and assistance packages, a VCCI spokesperson said that the 2 per cent VAT reduction strategy is the most effective, implemented the quickest, and "after all, companies and people immediately benefit."

Tuan noted that there are other additional solutions, such as commercial banks' 2 per cent loan assistance package, but implementation was delayed and many enterprises have not yet accessed it.

He said the status of Vietnam's budget revenues in 2022 has been fairly favourable, surpassing and exceeding expenditures in a comparatively favourable manner. Specifically, state budget revenues for the first 10 months of 2022 are projected to exceed $59.1 billion, or 103.7 per cent of the forecast and 16.2 per cent more than the same period in 2021.

"In the next challenging environment, strong measures such as the 2 per cent VAT reduction policy remain generally fair, both between the state and enterprises and between firms themselves," Tuan said.

VCCI officials have acknowledged that the 2 per cent VAT reduction scheme has increased revenue. This indicates that the initial tax cut will lower budget income by more than $500 million, but by stimulating output and spending, citizens will be willing to pay more.

"Given the aforementioned reasons, I believe that the government should still present a proposal to the National Assembly in 2023 to continue to have strong solutions to help enterprises, with a 2 per cent decrease in VAT being the answer to be implemented," Tuan said.

He acknowledged that the previous period had presented the operating systems of businesses with unprecedented challenges. Due to a fear of accountability, many agencies and officials refuse to execute policies, creating roadblocks.

For instance, several firms noted that the 2 per cent interest rate assistance package borrowed from commercial banks was applied slowly since some banks were constrained by the loan limit, which is limited at the end of the year. Moreover, it is a $1.6 billion assistance package extracted from the state's budget, which the apparatus is hesitant to deploy out of fear of accountability.

"The policy is fair, but without a mechanism to motivate the apparatus, its implementation will be very challenging. Therefore, while establishing policies, we must consider the aspect of implementation so that not only excellent policies and guidelines but also efficient operating methods are created," VCCI's representative said

Because the global economic and political situation is still tumultuous and the outlook for 2023 is not particularly optimistic, numerous Vietnamese businesses eagerly await government operating policies and business support.

By: Nhung Bui/ Vietnam Investment Review



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