Real costs increase, net profits narrow
The roadmap for converting the entire business household from the contract method to the self-declaration model is being accelerated, causing many concerns about the level of taxable revenue.
The proposed tax exemption of 200 million VND/year is currently becoming a controversial issue, with many opinions saying that this figure is "no longer meaningful" in the context of sharply increasing costs. At the same time, the tax rate applied to the group of households with a revenue of VND 200 million to less than VND 3 billion is also not suitable.
Ms. Le Hang - owner of a fried chicken shop on Lac Long Quan Street (Hanoi) said that the revenue may be high but the actual profit is very low, due to the steady increase in raw material, operating and labor costs.
I do not support the imposition of tax on revenue. If we calculate the profit, it will be more reasonable" - she said. According to calculations, she sells about 140 fried chicken portions per day for 50,000 VND/ portion, equivalent to a revenue of 7 million VND/day and about 210 million VND/month if kept unchanged.
However, raw material costs account for 50% of revenue, about 105 million VND/month. The rental fee is 20 million VND, the cost of electricity - water - gas is about 10 million VND, the salary of three employees working 14 hours a day is more than 31.5 million VND. The initial investment depreciation is approximately 20 million VND per month.
With revenue exceeding VND 200 million/year, business households in the group are subject to a tax rate of 4.5% on revenue, equivalent to a tax of VND 9.45 million per month. After adding all expenses, the total cost is nearly 196 million VND, the net profit is 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 or equipment repair. If we count all, it will be even lower" - Ms. Hang shared.
From the above realities, many opinions say that it is necessary to review the taxable revenue level to better suit the context of increasing operating costs, while ensuring that the tax policy does not create too much burden for small business households.
Business households will find it difficult to stick to the new proposed tax rate
Ms. Le Yen - CEO of Hanoi Tax Consulting Company Limited (Hanoitax) said that in many cases, when calculating revenue and tax payables correctly, real profits are almost gone, even facing the risk of losses.
Ms. Yen gave an example, a restaurant with a rented space and stable operations, with a revenue of about 200 million VND/month. If according to the new regulations, this household must pay a tax of 4.5% on revenue, equivalent to 9 million VND/month.
For a small household, 9 million VND in tax from a total revenue of 200 million VND is too high. If we honestly declare all revenue, this household will hardly be able to handle it" - she commented.
According to her analysis, the profit of the food industry is usually only about 20%. With a revenue of 200 million VND, the combined profit is about 40 million VND. However, this figure continues to have to deduct a series of fixed costs and operating costs: Site clearance fee of 1015 million VND, electricity and water fee of about 5 million VND, packaging - spice - materials, service fee and 9 million VND in taxes.
After all, the business household only has about 11 million VND, not including the debts of the business owner and employees. "If calculated enough, many cases do not even make a profit" - she said.
Not only the food group, Ms. Yen said that the tax rate based on revenue also puts great pressure on the service industry. For hair washing services, a salon with a revenue of 200 million VND/month is subject to a tax rate of 7%, equivalent to 14 million VND in tax per month. "This is a real number when calculated according to the correct revenue, not being evasive or covering up" - she affirmed.
According to Ms. Yen, previously contract tax was determined based on estimated revenue, so the actual tax is much lower: Only a few hundred thousand to 12 million VND/month. When switching to the real revenue declaration model and applying direct tax rates, the tax rate increased sharply, causing many households surprise and difficulties.
"Just need to have a revenue of about 200 million a month - equivalent to 2 billion VND/year" then the tax rate is 914 million a month. This is too big a number compared to the affordability of businesses, she emphasized.
She said that the transition to a new mechanism is necessary to make tax management transparent. However, if the profit margin of each industry and the appropriate tax rate are not properly assessed, many households will fall into a situation where there is no longer any business motivation.
