Business households hope to soon raise the tax-free revenue threshold
On the afternoon of April 21, at the first session of the 16th National Assembly, Minister of Finance Ngo Van Tuan presented a report on the draft Law amending tax laws, which proposed adjusting the threshold of revenue not subject to tax for households and individual businesses to support in the context of increased costs and reduced purchasing power. The draft does not specify the threshold level but assigns it to the Government to decide (currently 500 million VND/year).
Recorded from reality, many business households expressed agreement with the direction of raising the tax exemption threshold, saying that the current level is no longer appropriate when input costs and living costs have both increased in recent years.
Ms. Nguyen Thi Hong - owner of a grocery store in Tay Ho (Hanoi) - said that the average daily revenue of the store ranges from 2-3 million VND, at peak times it can reach 4 million VND. For the whole year, revenue is about 1 billion VND or less, but after deducting import costs, land rent, electricity and water, the actual profit is not much left.
“The profit is only enough to cover family living expenses, I also don't dare to hire workers, people in the family sell themselves. If we still keep it at 500 million VND, it's quite stressful. I think raising it to 1 billion VND is reasonable, because the revenue below the threshold is considered to help us offset costs. Doing small businesses like this, some months it's profitable, some months it's almost break-even,” Ms. Hong shared.
Meanwhile, Mr. Tran Van Minh - owner of a vermicelli restaurant in Cau Giay - said that increased input costs in the past year are eroding profits. Each day, the restaurant sells about 100-120 bowls of vermicelli, priced at 40,000-50,000 VND/bowl, with an average revenue of 5-6 million VND/day, equivalent to about 1.8 billion VND/year. However, raw material costs (fish, vegetables, vermicelli), gas, labor costs for 2 people and premises account for the majority of revenue.
Revenue looks high, but in fact costs account for about 70-80%. I support the option of raising the taxable revenue threshold to 1 billion VND and only calculating the excess tax, because that is fairer. For example, exceeding 400-500 million VND, only that part is calculated, and the rest is considered basic operating costs," Mr. Minh said.
Along with the expectation of raising the tax-exempt revenue threshold, business households also hope that the policy application time will be implemented soon to promptly reduce cost pressure and stabilize business operations in the context of a difficult market.
Industry classification and rate of return
According to Mr. Nguyen Van Duoc, General Director of Trong Tin Tax Accounting and Consulting Co., Ltd., the tax exemption revenue threshold for business households and individuals should fluctuate in the range of 1–2 billion VND/year. In which, the level of 1 billion VND is considered the average threshold of the economy, and about 2 billion VND can be applied to the commercial sector.
According to Mr. Duoc, raising the threshold too high can help business households reduce pressure, but also potentially risks budget revenue loss and not supporting the right subjects. Therefore, it is necessary to design policies in the direction of classification by industry and profit margin, instead of applying a common level.
He believes that different thresholds can be determined corresponding to each sector, such as about 2 billion VND for commercial activities, 1 billion VND for production with average profit margins, and about 750 million VND for services or production excluding raw materials, with high profit margins. This approach aims to ensure fairness between taxpayers, according to the principle that high income pays more tax, low income pays less.
