People shopping at a Big C supermarket. Businesses are facing many problems in implementing the new VAT rate. (Photo: VNA)Thispolicy is not new in Vietnam - the country did a similar move in 2009 tocushion the economy against the global financial crisis.
Therate cut this time will go through to December 31, 2022, and is applicable forthe majority of goods and services, with exceptions in the fields of telecomservices, financial services, securities, real estate, metals, chemicals andmining products, refinery and petrochemicals.
Essentially,all consumers and businesses are happy with the policy.
Intheory, when an economy is in trouble, to stimulate consumption and relieveimmediate pressure on people and help businesses survive, the government cantake short-term tax policy actions involving tax breaks such as VAT and goodsand services tax (GST). These indirect taxes apply as transactions take place,irrespective of whether a business is profitable. The effectiveness of this"prescription" has been proven by the fact that many other economieshave taken similar steps in response to COVID-19, including Germany, Italy, theRepublic of Korea, Spain, the UK and China.
InVietnam, nearly a month after this policy was introduced, the implementationhas not been smooth and effective.
Consumerscan enjoy VAT reduction mostly in supermarkets, companies or big storeswith clear invoices, while in traditional markets or streets shops, pricesof many products have yet to decrease but even increase for a legitimate reason– increased petrol prices.
NguyenThi Binh, who shopped at Big C Thang Long in Hanoi, was happy to buy essentialgoods such as tissue paper, milk, noodles and household appliance at the new8 percent VAT rate. The invoice clearly demonstrated which goods enjoy thenew tax rate, and which are at the same rate. She saved 20,000 VND on abill of about 1 million VND.
“Thesaving amount is not large but I’m happy to see the policy is brought into lifeand is benefiting consumers in this difficult time,” Binh said.
Supermarketshave more than 10,000 products in the group of fresh foods, technologyproducts, fashion and apparel products, and some household appliances that havebeen eligible for a 2-per-cent VAT rate cut.
However,not all stores can apply new prices for customers. Many convenience stores addthe value-added tax to product prices, so consumers are not clear on thebenefits.
HoangMinh Yen, a Hanoian, said she bought many goods including fruits and someessential items at a convenience store near her house in Minh Khai street for atotal of 700,000 VND. The receipt only stipulates “price includes VAT”, so shedoes not know if she made any savings.
“WhenI asked, the salesman said he did not understand the implementation of a VATreduction. The staff said he would forward the customer's complaint to thestore manager and give feedback later,” Yen said.
Meanwhile,in traditional markets and street shops, most sellers do not issue invoices,and neither the seller nor the buyer knows and care about VAT. Buyers only careif the price of that item increases or decreases compared to before, whilesellers said they sell goods based on cost and profit, not anything else.
“Ionly know how much I buy goods, plus profit, to calculate the selling price anddon’t care how VAT increases or decreases. After Tet (LunarNew Year), prices of many goods increased due to higher input prices and gasolineprices,” said Nguyen Thi Hoa, a grocery saleswoman at a market in Hanoi.
Aswell as vegetables, other popular foods such as fresh vermicelli, pho (beef noodle) and bun ca (fish noodle) all saw pricesincrease.
Businessesconfused
Recently,some tax departments in cities and provinces issued a document urgingbusinesses to implement the VAT reduction policy. The tax authority alsoemphasised violations would be severely handled.
However,from the business side, they said they were facing many problems inimplementing the new rule. Many complain they do not know clearlywhether their sale items are on the list of goods and services eligible for aVAT cut or not.
Inthe process of tax declaration and tax imposition, many accountants areconfused about reviewing and comparing goods and services of their businessesto the list of products and services eligible for a VAT cut. For example, can aphotocopier business, when issuing invoices, get a 2 percent tax reduction whenthe input of ink is subject to a 10 percent VAT, but the paper is 8 percent? Orwhen selling alcohol, the VAT rate remains 10 percent, but if that bottle ofbeer is served to guests at a restaurant, it can enjoy the 8 percent rate.
Thisburden will be enlarged for enterprises selling thousands of items.
Besides,confusion remains for goods handed over and services completed, before theeffective date of the policy, but have not yet been invoiced due towaiting for debt settlement or due to the Tet holidayor other objective reasons, will those goods and services enjoy tax cut?
Accordingto Nguyen Van Thuc, chairman of BCTC Co Ltd, a tax service consulting company,many businesses and accountants are still confused about the new rule, asthe policy took effect on February 1 during the Tet holidayand there was not enough time for firms to research and edit the accountingsoftware.
Inaddition, using the code of goods and services to determine the subjectseligible for the 8-per-cent VAT rate is very broad. Businesses with hundreds orthousands of items, such as stationary businesses and supermarkets, need a lotof time and effort to check the items under the new rule.
Therefore,enterprises hope the Ministry of Finance will soon issue a detailed guidancecircular.
PhamThi Minh Hien, Deputy Director of Policy Department under the GeneralDepartment of Taxation, said the tax authority had directed tax departments andbranches in localities to further promote the information of the policy topeople and businesses, as well as provide guidance, inspect and supervise theapplication of the new VAT rate.
"Thepolicy is aimed to stimulate consumption demand," Hiền said, duringthe implementation process, tax authorities would check and supervise theselling prices of goods and services of businesses and would handle anyviolations./.
VNA
