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Business people whose income is not equal to that of workers still have to pay tax

With a tax threshold of 100 million for business households and individuals, a salesperson who earns even half of a worker’s salary must also pay tax.

Currently, business households and individuals with a turnover of more than 100 million VND per year, ie 8.4 million VND per month, 275,000 VND per day are subject to flat tax (including value added tax and personal income tax). core).

With this tax threshold, assuming business people achieve the highest profit margin of up to 50% of revenue, their actual income is only about 4.2 million VND per month – already subject to tax.

Ms. Lien (36 years old, Ho Chi Minh City) opened a shop selling household plastic products at a toad market – is one of many business households that have been paying taxes in District 4 for many years now.

“Every day it sells well, the money is from one to two million, if not, it’s less. Tet is the most crowded occasion of the year thanks to the sale of offerings. On average, I sell more than 30 million VND per month. money,” said Ms. Lien. Fortunately, when she lives with her husband’s family, she does not have to pay rent for the premises, so the profit is nearly 10 million per month.

“Although the income is not equal to that of factory workers, the family has to accept that because of the small children, my husband works far away, and my health is not good,” she said and said that because of the registration of a business household, her family had to work. Her family pays taxes and license fees in full.

She shared, the State regulates why she complies, but sometimes she also thinks, “My income is so low, I still have to pay tax. Not to mention selling like I don’t have health insurance or social insurance. to enjoy the co-retirement as a salaried employee”.

Some cases of business in motels for rent are also subject to tax, but the actual income is only a couple of three million, even zero. Nguyen Tan – an inn business in Thu Duc City (HCMC) for nearly a year said that he and a friend set up a business model of renting a whole house, then dividing the room and fully furnished to let the guests live. rent. With 6 rooms, they collected 22 million dong in rent. Every month, Tan and his friend have to pay the original owner 16 million VND and about 500,000 VND for electricity for the common activities of the inn, garbage for toilet…

If they pay 7% tax on sales, they need to pay more than VND 1.5 million per month (22 million x 7%). Thus, after deducting all expenses, the profit split with you, Tan received only about 2 million VND a month. “If every month the house is damaged, we still have to spend money to repair it. Each time we need to spend hundreds of thousands to millions of dong. It is considered as a loss of profit”, he shared.

The owner of another restaurant in Phu Nhuan district (HCMC) also informed that he is paying a total of nearly 7 million VND in tax each month. With a turnover of more than 1.8 billion dong a year, she is in the category of an individual business subject to tax. According to current regulations, shops pay 3% value added tax and 1.5% personal income tax. The owner of this store said that, although the monthly revenue is more than 155 million VND, the actual profit she earns after paying tax is only about 20 million VND.

“I don’t understand what’s the point of setting a level of 100 million dong, because with the above revenue, almost everyone has to pay tax,” she said, and for example, a woman driving a car selling sticky rice around her house also sold about 300,000 VND a day, ie had to pay tax.

The owner of this country said that the current floor level is too outdated and needs to be raised more so that people have the motivation to do business, especially in the recovery period after the peak of the epidemic.





People trading fresh pork in Hanoi market with daily sales money must be at least half a million dong.  Photo: Quynh Trang

Trader of fresh pork in Hanoi market – one of the business individuals subject to value added tax and personal income tax. Photo: Quynh Trang.

The minimum wage has increased by 64%, but the tax threshold for business households has stood still for 7 years.

Previously, the income of business households and individuals was compared with the regional minimum wage as a basis for tax calculation. However, from 2014 to now, the Law amending the Law on Value-Added Tax stipulates a taxable threshold based on revenue – ie annual revenue greater than 100 million – equivalent to a daily turnover of more than 275,000 VND that must be taxed.

Instead of calculating tax on profits like when establishing a business, the tax authority applies a flat tax with a lower tax rate – calculated on revenue for business households and individuals because it is difficult to verify input costs. . With a turnover of over 100 million dong per month, business people usually have to pay flat tax from 1.5% to 10% of revenue (depending on what kind of trading and service activities).

Tax rates for certain types of businesses

STTTypePersonal incomeVATtotal
firstLease of assets (house, land, shops…)5%5%ten%
2Short-term accommodation services; long-term rental not apartment with students, workers5%2%7%
3Food service, repair and maintenance of motorbikes and cars3%1.5%4.5%
4Tailoring, laundry, haircut…5%2%7%
5Wholesale and retail of goods (except for commission agents)first%0.5%1.5%

Assoc. Prof. Dr. Nguyen Khac Quoc Bao, lecturer at the University of Economics in Ho Chi Minh City, assessed that the taxable income threshold of VND 100 million for business households and individuals has become outdated with current living standards, especially when the deduction level family situation has been raised from 9 million dong to 11 million dong. “This taxable income threshold is not even enough to cover their living needs, but asking them to pay tax is not appropriate,” said Mr. Bao.

If only calculated by the growth rate of the consumption index (CPI) – a figure that is reflected far from the actual increase in people’s spending, the minimum taxable threshold must also be at least 120 million VND. . If based on the growth rate of regional minimum wages, the current taxable threshold should be at 163 million dong.

According to the proposal of Ms. Nguyen Thi Cuc, President of the Vietnam Tax Consultants Association, the taxable threshold for business households and individuals should be adjusted to at least equal to the family deduction applied to wage earners. , which is at least 132 million per year (11 million dong multiplied by 12 months).

In addition, the way to calculate tax on total revenue of business households and individuals also encounters mixed opinions.

Currently, the lessor is the subject of tax with the highest tax rate in the business household and individual (7% or 10% depending on the type of rental). According to the Ho Chi Minh City Real Estate Association (HoREA), the way value-added tax and personal income tax on total rental revenue is calculated further creates an inequality between tenants and tenants.

HoREA takes an example, if Mr. A has a turnover of 100 million VND a year, he does not have to pay tax. But Mr. B – the lessor with a turnover of 110 million VND a year must pay value-added tax and personal income tax of 11 million VND (if the tax rate is 10%). Deducting the tax amount of 11 million VND, Mr. B only has an income of 99 million VND a year, lower than Mr. A. Thus, the taxpayer is Mr. B from the place where the revenue is higher than Mr. A’s, after fulfilling his tax obligations. have lower revenue. Therefore, this tax calculation method does not ensure fairness and does not promote the healthy development of the market.

For those who are renting houses who are burdened with the tax rate of 7-10% of the turnover, this association suggested the Ministry of Finance consider changing the way to calculate value-added tax and personal income tax in the direction of taxing only for with the part of revenue exceeding the taxable threshold will be more reasonable.

Agreeing that this calculation method has some unreasonable points, Ms. Cuc said that tax authorities should also consider and discuss carefully the option of “taxing the part of the revenue that exceeds the taxable threshold instead of taxing the total revenue”. “.

Respond to VnExpressa representative of the Tax Administration Department for small, medium enterprises, business households and individuals (General Department of Taxation) also affirmed the view that “it is necessary to raise the taxable threshold for business households and individuals”.

The tax authority is also studying a proposal to raise the taxable threshold for business households, but has not yet decided how much to raise. Raising the taxable threshold must consider many factors including the regional minimum wage and another important aspect is the balance of state budget revenues, this representative said.

Quynh Trang – Siddhartha

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