Small businessmen hope Assembly will approve tax reductions

VietNamNet Bridge – Small merchants are as nervous as cats on hot bricks. For them, much depends on the final decision of the National Assembly on a proposed tax exemption and reduction. The Assembly’s vote is expected soon.

Demand for goods and services has fallen dramatically since the end of 2008. Some markets have reported a fall of 50 percent in sales as people are still trying to tighten their belts and limit spending during the economic crisis period.

If the National Assembly approves tax exemption . . .

458,000 business households may benefit from tax exemption or reduction If the proposal by the Ministry of Finance is approved, small business households in particular may enjoy tax reduction or exemption. It is estimated that 458,000 business households would be exempted from 1.3 trillion dong of tax, while only 249,100 employees would enjoy a tax exemption totaling 1,100 billion dong

Phuoc, who sells rice and eggs at Nhat Tao Market in HCM City, complained that his sales have dropped by 2/3 compared to 2008. Meanwhile, he has to pay 500,000 dong in tax each month, more than he did 2008. Phuoc said that if the National Assembly does not agree to reduce the tax burden, he and other small business households will be in serious trouble.

Truc, the owner of a convenience store in Go Vap district, HCMC, related that she has had to pay 344,000 dong in tax every month. She was so happy, she said, when she heard that the Ministry of Finance has proposed to waive the personal income tax (PIT) for the first six months of the year and grant a 200,000 dong per month tax reduction from July 1, 2009 until the end of 2010.

Truc said that if the National Assembly approves the suggestion, Truc and small business households like hers will not have to pay PIT. “In fact, 200,000 dong is not really a big sum, but it has big significance,” she added. “As the Vietnamese saying goes, a small piece of bread at the time when you are hungry is as valuable as a whole loaf of bread when you are full.”

Minh, who sells consumer products at Tan Son Nhat Market, said that the proposed PIT exemption for the first six months of the year and 200,000 dong tax reduction until the end of 2010 will help petty merchants a lot. They will have more money to spend on their children’s schooling and their family’s meals.

Phuc, who sells confectionary products at Phu Nhuan Market, said that the purchasing power has decreased by a half

Only 9.5 percent of business households are ‘high income’

According to the HCM City Taxation Agency, there are 126,000 business households in the city, but only 12,000 households, or 9.5 percent, have a monthly income of 11 million dong and higher, and so will be obliged to pay taxes if the 200,000 dong reduction is approved.

Tran Thi Le Nga of the HCM City Tax Agency explained that under the current law, which grants an exemption of 4 million dong per month per taxpayer and a 1.6 million dong exemption for up to two dependent members of the taxpayer’s family), 114,000 households in the metropolis, or 90 percent of the its business households, have a taxable income of less than four million dong per month. The current tax on four million dong is 200,000 dong, so 90 percent of these households will not have to pay PIT until the end of 2010.

Deputy Minister of Finance Nguyen Cong Nghiep also said that nationwide, there are nearly two million business households, but only 458,000 households have an income high enough to be taxed. If the ministry’s exemption proposal is approved, only about nine percent, or less than 100,000, will be liable to any tax for the next eighteen months.