Vietnamese Traders Face Mounting Pressure
In recent times, numerous traders at various wholesale markets and individual business households across Vietnam have shut down or temporarily halted their operations.
Speaking to
Tien Phong
newspaper, Mr. Nguyen Hoa Binh (also known as Shark Binh), Chairman of NextTech Technology Corporation, asserted that the mass closure of businesses nationwide is a grave issue. He attributed it not to incitement but to fear among traders of tax audits and seizures of goods due to a lack of input invoices.
Shark Binh
believes that small businesses are currently facing multiple challenges. They have been struggling against the rise of online retail and are now confronted with the shift from presumptive tax to revenue tax, which necessitates price increases, familiarity with technology, and tax declarations. Additionally, they face the risk of their stockpiled goods being scrutinized by authorities, a challenge prevalent in sectors like catering and agriculture, where obtaining input invoices has been historically difficult.
According to Mr. Binh, only cross-border suppliers (XBS) are benefiting from the current situation. Specifically, Shopee, which holds 70% of the e-commerce market share, has approximately 31,500 XBS sellers from overseas. However, apart from the recently implemented value-added tax (VAT), these XBS retailers are not subject to the same obligations and responsibilities as their Vietnamese counterparts.
They are exempt from import taxes, revenue or income taxes, and other duties. This creates a significant competitive advantage over Vietnamese goods. For instance, they are not subject to customs clearance, quality inspections, or standards compliance; they are not monitored or supervised, and they have no obligations regarding warranties or after-sales service.
Leveling the Playing Field
Mr. Bui Van Dien, Deputy Chief of the Hanoi Provincial Market Management Bureau, suggested that businesses that temporarily cease operations often have issues with non-compliant practices or the sale of goods with unclear origins. In contrast, legitimate businesses continue to operate as usual.
Mr. Dien proposed that intensified inspections and enforcement by authorities would help curb the trade of counterfeit and substandard goods. He advised traders to ensure proper invoicing for their goods and invest in machinery and equipment, adhering to tax declaration regulations.
Mr. Nguyen Dang Manh, Director of Ninh Hiep Investment Joint Stock Company (which manages Ninh Hiep Market in Gia Lam District), noted that the closure of small businesses would result in significant losses for the state budget. Mr. Manh acknowledged the necessity of authorities’ actions regarding the origin and provenance of goods but emphasized the need for a gradual approach that allows traders time to clear their inventories, adapt their business models, and procure the required documentation.
Shark Binh proposed that authorities focus on combating counterfeit and substandard goods that pose health risks. He suggested differentiating between harmful and essential goods, with harsh penalties for the former and appropriate measures for the latter. Additionally, he recommended allowing traders to declare and commit to selling off their existing inventory within a specified period, after which they must possess complete input invoices.
Mr. Binh also proposed that, in addition to VAT, the state should impose a revenue tax (a minimum of 10%) on the value of XBS retail orders through e-commerce platforms entering Vietnam. He further suggested reducing the value of XBS orders eligible for import tax exemption from the current 1 million VND to 100,000 VND or even eliminating it altogether, as practiced in many other countries.
Furthermore, Mr. Binh advised the state to monitor the outflow of funds to foreign countries by e-commerce platforms to ensure tax compliance and prevent transfer pricing. He also recommended implementing policies to regulate the fee structure of these platforms and provide advantages to domestic enterprises.
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