The 200 million VND threshold is easy to overcome
Business households are entering the transition phase to the self-declaration model, in which revenue from 200 million VND/year is proposed as the taxable threshold, and apply a tax rate of 4.5%/year for revenue from 200 million VND to under 3 billion VND.
However, many households think that this level is too low compared to the current cost- price level. If the cost of premises, labor, raw materials, deductions and taxes is fully deducted, the net income of small business households will be even lower than the minimum.
Ms. Thu Huyen, owner of a small fish noodle shop in Xuan La (Tay Ho, Hanoi) shared that the revenue of 200 million VND/year is equivalent to nearly 17 million VND/month. According to her, this number is easy to achieve in the food business. "I have calculated that just a revenue of about 550,000 VND per day has reached 200 million VND per year. My restaurant only has a few tables, selling 35,000 VND/bowl of fish noodle soup, meaning that if I only sell 16 bowls a day, I will have reached the tax payment threshold," she said.
According to Ms. Huyen, most households providing food services or groceries have surpassed this threshold after only a short period of operation. Even for very small households or street vendors, selling 16-17 bowls of noodles a day is not difficult. In fact, we have to pay taxes every month because revenue exceeds the threshold very quickly, but actual income is not enough to cover urban living expenses. If there is an additional 4.5% tax, profitable business will be even more difficult, she shared.
Many other business households also believe that the revenue of 200 million VND/year "sounds big but in reality it is not enough to survive" if calculated on net profit. A food and beverage business household said: "The 200 million VND tax payment is too low, small businesses will not be able to survive if this threshold is calculated. For example, if the average revenue is about 17 million VND per month, after deducting expenses, the profit is only about 2-3 million VND. Such an income is too low compared to the cost of living in urban areas, and can even be considered a poor standard of living".
Large business households also struggle with a tax rate of 4.5%/revenue
On a larger scale, Ms. Le Hang - owner of a fried chicken shop on Lac Long Quan Street (Hanoi) said: "The revenue may be high but the actual profit is very low, so I do not support applying tax on revenue, it will be more reasonable to calculate the profit. If I sell 140 fried chicken portions per day for 50,000 VND/portion, the revenue per day will reach 7 million VND. Maintaining it for 30 days, the revenue is about 210 million VND per month".
Ms. Hang calculated that raw material costs account for about 50% of revenue, equivalent to 105 million VND per month. The rental fee is 20 million VND, the electricity - water - gas cost is 10 million VND, the salary of three employees working 14 hours a day is about 31.5 million VND. The initial investment depreciation is approximately 20 million VND per month.
With a revenue of 210 million VND, business households in the group with a revenue of over 200 million VND/year to under 3 billion VND/year and must pay tax at a rate of about 4.5% on revenue. The arising tax amount is equivalent to 9.45 million VND per month.
After adding all expenses, the total cost reached nearly 196 million VND, the net profit was only about 14.05 million VND. This Clause does not include advertising costs, platform commissions, lost raw materials, inventory that must be discarded, compulsory social insurance for personnel or repair costs. If we calculate all, the income will be even lower," said Ms. Hang.
From the above reality, many opinions suggest that the management agency reconsider the taxable revenue level to suit actual business conditions, especially in the context of increasing operating costs. Re-evaluating this threshold is considered necessary to reduce pressure on small business households and ensure that tax policies are close to the actual capacity of each business household group.
Need to consider higher adjustments
According to Dr. Nguyen Ngoc Tu - lecturer at Hanoi University of Business and Technology, applying personal income tax based on revenue of 200 million VND/year is unreasonable and needs to be considered for a higher adjustment.
Ms. Nguyen Thi Cuc - Chairwoman of the Vietnam Tax Consulting Association - said that the tax rate of 200 million VND/year for business households is too low, so it should be increased to 500 million VND - 1 billion VND/year. With a revenue of 1 billion VND per year, the average profit is about 16%, equivalent to 160 million VND, or about 13.3 million VND per month. This level is equivalent to the income of a public employee who is currently applying a family deduction of VND 15.5 million, Ms. Cuc analyzed.
