The VAT Amendment Law’s Impact on State Budget Collection and Business Operations

In the corridors of the National Assembly, some delegates shared that the upcoming amendments to the Value-Added Tax Law will significantly impact businesses and state budget revenues. They emphasized the need for coordinated efforts between ministries, sectors, and local authorities to facilitate business operations and promptly address any emerging challenges.

Several delegates highlighted the direct impact of the amended Value-Added Tax Law on the rights and interests of organizations, individuals, citizens, and businesses. The law includes provisions for exempting certain imported goods from taxation. To ensure effective implementation, ministries, sectors, and local governments need to closely coordinate and widely communicate these changes to affected entities, fostering unity in action and alignment with market economy demands and international practices.

Delegate Ho Thi Minh from Quang Tri province shared, “While reducing value-added tax may result in revenue shortfalls, we believe that in the current context, this is an opportunity to revive business activities. The government needs to provide strong leadership to ensure that the reduction does not compromise budget revenues and facilitates business growth. We strongly agree with and support the need to stand by our businesses. When enterprises thrive and survive due to our policies, we will recoup these losses. Accompanying businesses is also the responsibility of the National Assembly and its delegates.”

According to some delegates, when applying these amendments in practice, it is crucial to clearly define the goods and services subject to taxation, tax-exempt items, tax calculation methods, and the timing of value-added tax determination. Regarding the provision authorizing the Government to specify tax-exempt household and personal goods and services, delegates emphasized the importance of this delegation to ensure flexibility and effectiveness in governance.

Delegate Tran Hoang Ngan from Ho Chi Minh City remarked, “For items with high value, such as jewelry, further discussion is needed to determine the threshold, with detailed regulations provided by the Government. Increasing taxes does not necessarily lead to higher budget revenues, as higher taxes may result in decreased sales. The critical factor is sales volume. Why have we been able to reduce value-added tax continuously for the past two years while still increasing budget revenues?”

Delegate Nguyen Quang Huan from Binh Duong province emphasized that to achieve the strategy of mobilizing 16-17% of GDP into the state budget by 2030, with taxes and fees accounting for 14-15% of GDP, domestic revenue collection must reach 86-87%. He suggested that tax policies need to be flexible and practical. As an example, he cited the proposed continuation of a 2% VAT reduction in the first six months of 2025 to stimulate consumption and support production and business activities. The expected revenue loss for the state budget during this period is equivalent to approximately VND 26.1 trillion, a substantial amount. Therefore, specific priority sectors and industries should be identified.

“Reducing VAT for businesses is beneficial, but some businesses may not need it as they can pass on the costs to consumers. The Government should carefully consider this. Reducing taxes for manufacturing businesses is excellent for stimulating demand, as they are still struggling. However, for businesses that are unaffected or already stable, a tax reduction may not be necessary,” suggested Delegate Nguyen Quang Huan.