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VAT and Enterprise Income Tax Decree Improvement Suggestions (23/3)
23/03/2011 - 5 Lượt xem
Needed: fixing concrete time to define VAT and make a deduction of VAT
Vietnam Association of Certified Public Accounts (VACPA) deputy chairman and general secretary Bui Van Mai said that although Decree 123/2008/ND-CP has provisions governing time to define VAT subject to goods and services it does not have guidelines for cases where an invoice is released for payment in advance for a signed contract, and that the inadequate regulations made businesses confused. Hence, it is necessary to make the decree have detailed guidelines in this regard, he said.
Regarding incoming VAT deduction, according to law, incoming VAT of a month is declared and deducted when tax related to that month is defined/calculated. In cases where a business discovers a missing incoming VAT upon tax declaration and deduction that business can make an additional declaration and deduction of that incoming VAT no later than six months after it first discovers the missing tax.
Decree 123/2008/ND-CP does not have guidelines for cases in which invoice release time and acceptance/delivery time are not the same. Therefore, Mai proposed that goods and service purchasers of cases, in which a business selling goods and services to someone does not establish an invoice upon goods and service sale but does that a certain period of time after that, have access to VAT deduction and refund in accordance with time stated on the invoice no later than six months after the invoice's date.
Inconsistent VAT rates subject to export processing zone businesses
Nguyen Doan Thang, the deputy general secretary of the Vietnam Young Business Association, said that according to current guidelines of the General Department of Taxation, a number of services provided for export processing zone businesses, including services that are not subject to a zero (0) percent tax when they are provided by domestic businesses for businesses in export processing zones (e.g. services of transporting cargo from a port to a bonded warehouse area or vice versa, tax and customs declaration services and services of loading containers on board and vice versa that are among import and export-related services) are not subject to a zero (0) percent VAT.
However, according to 1.3 in 1, Item II, Part B, Circular 129/2008/TT-BTC, which provides guidelines for implementing the VAT law and Decree 123, those that are not subject to a zero (0) percent tax include services that domestic businesses provide for organizations and individuals in bonded warehouses and are delivered and consumed outside bonded warehouses, such as leasing houses, meeting halls, offices, hotels, warehouses and holding yards, and worker transport.
This shows that Decree 123 does not say that goods and services that domestic businesses provide for export processing zone businesses can be applied to a zero (0) percent tax when they used or consumed within bonded warehouses. On the other hand, according to Circular 129/2008/TT-BTC, only services, including transport services, described 1.3 in 1, Item II, Part B are not subject to a zero (0) percent tax.
Section H in Decision 10/2007/QD-TTg dated January 23, 2007 says that overland transport operations have code number 49, waterway transport operations have code number 50 and warehouse and holding yard operations and transport promotion activities have code number 52. This means that operations and services catering for the transport sector are a different economic industry that is not included in the transport sector.
Thang assessed the fact that the General Department of Taxation put all kinds of expenses of import and export services used by export processing zone businesses (container loading and unloading, CFS, THC, customs declaration, and documentation, agent and storage fees) and transport services into the same group is improper and incompliant with the economic sector regulation issued by the Prime Minister and causes difficulties for operations of export processing zone businesses and domestic businesses that provide those services.
Needed: Making exchange rate difference consistent
Nguyen Doan Thang, the deputy general secretary of the Vietnam Young Business Association, said that implementation of Government Decree 124/2008, which provides guidelines for executing the enterprise income tax law, needs consistent regulations on exchange rate difference evaluation because inconsistent guiding documents still exist and cause businesses to encounter difficulties. To make taxable income definition more proper in relation with exchange rate difference evaluation, Thang suggested that the followings be applied:
Exchange rate profits due to reevaluation of foreign currency-based monetary items late in a fiscal year and exchange rate losses due to reevaluation of foreign currency-based monetary items late in a fiscal year balance one another. Exchange rate profits and losses remaining after the balance are considered as other incomes and taxable income definition cost, respectively.
The fact that income from a difference in exchange rates related to money deposited in a bank (related to which no payment job is done but just money is transferred from one account to another to prepare for goods payment) is listed among other incomes is improper because in this regard businesses not yet make any profit but must pay an enterprise income tax according to the related tax declaration.
Sharing Thang's point of view, the VCCI representative said that it is necessary to make exchange rate application consistent because some businesses apply inter-bank exchange rates and others apply commercial joint stock bank exchange rates while the inter-bank exchange rate is quite different from the real exchange rate.
Considering enterprise income tax and VAT reduction
Lawyer Dao Ngoc Chuyen, the head of the Lawyer Dao and Colleagues Office, said that in the current situation of economic development it is necessary to reduce enterprise income tax. Chuyen analyzed that the current 25 percent enterprise income tax is no longer suitable to the current situation in which incoming costs have increased considerably and capital mobilization has become harder. If the tax rate is reduced to 20 percent or another rate of less than 25 percent businesses will be able to accumulate capital, carry out reinvestment and develop production and trading activities.
Chuyen analyzed that benefiting from a lower tax rate, businesses will pay less to the state budget but be able to spend the would-be-reduced tax on reinvestment for production and trading activity development, and therefore the reduced tax could help businesses make profits and pay more to the state budget in the following tax payment period. If the current 25 percent tax is maintained, it will make foreign invested businesses' price transferring popular and this is expected to cause domestic businesses to face unhealthy competition.
Chuyen proposed that the authority to consider VAT subject to many goods and service categories to make changes in accordance with increases in prices and businesses' incoming costs.
Representing the Association of Vietnamese Insurers (AVI), Nguyen Bang Duy proposed that the authority free non-life insurance services from VAT explaining that such tax exemption is a direct assistance for non-life insurance service users.
The Vietnam Tea Association suggested a five percent reduction in VAT (from 5-10 to 0-5 percent) subject to preliminarily processed tea and products sold on the market to help tea businesses improve competitiveness./.
Source: VEN.
