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Recently, the National Assembly decided to remove the threshold of 500 million VND in annual revenue for tax payment by households doing business and granted the Government the authority to adjust this threshold. The authorities said that applying thresholds by sector would make the tax system more complex. Tax experts, however, noted that the issue could be considered to ensure “income amount, tax paid accordingly.”
International experience indicates that some countries, such as the United Kingdom and the Philippines, use similar approaches. In terms of regulation, Vietnam’s current tax system already applies different tax rates by sector. For example:
Tax experts said that if tax-free thresholds were applied by sector, the tax system would become more complex. The complexity would affect not only tax authorities but also taxpayers.
They pointed out that business trends increasingly involve multiple sectors. Classifying revenue by sector to determine thresholds would take time and cost, while also increasing the burden of declaration and accounting. At the same time, tax authorities would need to strengthen monitoring, inspections, and final settlement, creating pressure for both sides.
Experts argued that each business model has different profit margins. Applying tax-free thresholds by sector to ensure “tax collected appropriately” could therefore be considered. They said the underlying idea is to improve fairness in taxation.
From a longer-term perspective, applying thresholds by sector would require careful study of profit ratios and margins across a broad range. Policy design would also need to consider not only business households but also small and micro enterprises to maintain balance across different economic groups.
Experts added that the goal is to achieve “relative fairness,” because absolute fairness is difficult to achieve if it relies only on the factor of sector. If additional factors are included—such as deductions for dependents and costs for raising dependents—the system would become even more complex for both tax authorities and taxpayers.
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