Ministry of Finance rejects proposal to raise VAT threshold

10:52 AM @ Monday - 04 March, 2024

The Ministry of Finance (MoF) has rejected a proposal to increase revenue thresholds for value-adde (VAT) tax for individuals and household business to VNĐ300 million (US$12,500) a year, citing concerns that a higher tax threshold would deter household business from converting to enterprises.

In the latest draft amendment to the Law on Value Added Tax, the ministry has maintained its proposal that individuals and household business with revenues exceeding VNĐ150 million per year will be subject to VAT tax, an increase of VNĐ50 million from the existing level.

During recent discussions on amending the Law on Value Added Tax, representatives from Quảng Ngãi Province have suggested to raise the threshold to VNĐ300 million, while other agencies proposed lower levels, with the Ministry of Transport proposing VNĐ250 million.

The Vietnam Tax Consultants' Association (VTCA) have suggested a threshold of between VNĐ180 million and VNĐ240 million.

The rationale behind these suggestions is that CPI has increased significantly since the amended Law on VAT 2013, which replaced the 2008 law, came into force from the beginning of 2014.

There are 5.5 million household businesses in the country that account for 30 per cent of its GDP, according to the General Statistics Office.

VAT accounts for more than 20 per cent of the government’s budget revenues.

Việt Nam has extended the 2-per-cent VAT reduction policy till the end of June this year given prolonged economic difficulty.   – VNN