The proposal to allow small traders to declare all their inventory, pay taxes in full, and "turn a new page" by paying taxes based on sales invoices to legitimize their operations is receiving mixed opinions.
Afraid to open the store because of unsold inventory and missing invoices.
On Monday morning (June 9th), many small traders at some traditional wholesale markets in Ho Chi Minh City went to the market, but did not dare to open their shops for fear of being inspected and having their goods confiscated for selling without input invoices.
A small business owner selling shoes at An Dong Market (District 5) said: “Opening the stall door at the market is difficult because if the market management inspects, I don't know how to prove the origin of the goods I bought. But even without opening the shop, I still have to pay taxes, employee salaries, warehouse rent, and space rent… Opening the shop means facing a lot of expenses. These past few days, the authorities haven't inspected the market, but they've been inspecting the warehouses of small business owners, confiscating a lot of goods because there are no input invoices. We can only petition the government to have a roadmap to give business households and small business owners time to reorganize and turn a new page in their business operations. As it is now, the risk of bankruptcy and ruin is high because we don't dare sell our goods, and confiscating and destroying our merchandise is too wasteful…”
Wholesale market vendors close their shops at the beginning of the week: What's going on?
Previously, traders at An Dong Market petitioned the authorities to allow them to re-declare all their existing inventory. They agreed to pay the full tax amount for this inventory in one go to continue their business in the new phase, transitioning from a lump-sum tax payment to a tax payment based on sales invoices starting from June 1st. On June 9th, in an interview with a reporter... YouthSmall traders at Binh Tay Market (District 6) and Tan Binh Market (Tan Binh District) said they also wish to declare all goods in their stalls and warehouses, and pay taxes fully and transparently before switching to a system of buying and selling goods with full invoices and paying taxes based on revenue.
Reportedly, after a meeting with over 200 small traders, the An Dong Market Management Board will compile the opinions and suggestions of the traders to report to higher authorities for consideration and to implement preferential policies, creating favorable conditions for traders to adapt to the new regulations as smoothly as possible.
We are currently in a market adjustment phase. Things will become clearer after six months. Those who conduct business seriously and honestly can reopen their shops and bring everything under order. Those who continue to sell tax-evading goods, counterfeit products, etc., will be shut down. Only then can we promote the development of domestic production.
– Associate Professor, PhD Vo Tri Hao
The "start over" challenge.
Senior expert, Associate Professor Vo Tri Hao (Institute of International and Comparative Law – University of Economics and Law, Vietnam National University Ho Chi Minh City) believes that two issues are occurring simultaneously: firstly, changes in tax policy to create fairness for honest businesses. Taxing based on revenue gives honest businesses a chance to compete on equal terms. Secondly, the tax system will lead to the elimination of goods without proper origin, counterfeit goods, and fake products. Currently, these two issues are interconnected, leading to small traders in wholesale markets ceasing business operations as a response.
“It should also be clarified that regulations prohibiting the trading of counterfeit and pirated goods have been in place for over 30 years; they are not new. Only the regulation replacing the lump-sum tax with a revenue-based tax is new. Therefore, from an economic perspective, goods without purchase invoices from small traders and household businesses should be divided into two categories: counterfeit, pirated, substandard, and harmful goods… which must be destroyed. If traders can prove that the goods are not counterfeit, not a trademark imitation, and not harmful… then destruction is unnecessary. Destroying everything would be very wasteful from a socio-economic standpoint,” Dr. Hao suggested.
According to Dr. Hao, if the origin of goods cannot be proven, the method of presumption must be applied. Small traders and household businesses should declare all inventory in their warehouses and stalls. If it is presumed that the goods do not violate regulations and are not harmful to society or the economy, then they should pay value-added tax and a revenue tax of approximately 15%. The second method is to estimate the total value of those goods for charitable activities instead of destroying them. "We are in a transitional phase creating principles of fairness in business operations. Anyone who intentionally evades taxes must be subject to a presumption tax rate. People in the industry can figure this out easily," Associate Professor Dr. Vo Tri Hao emphasized.
Conversely, Associate Professor Pham The Anh (Head of the Economics Department, National Economics University) argues that, fundamentally, legitimizing goods of unclear origin, counterfeit goods, smuggled goods, and goods infringing intellectual property rights is unacceptable. “Declaring the origin of goods is possible if proven, but tax evasion is very difficult. In reality, it's not just 2 million individual business owners, but tens of millions of other workers who are employed and must fulfill their income tax obligations to the state. There are tens of millions of salaried workers, all their income is fully reflected on VNeID, and of course, they must pay their taxes in full. While trading in counterfeit goods, smuggled goods, or incomplete income declarations are allowed to go unpunished, this is unacceptable. In fact, connecting point-of-sale systems to tax authorities has been done for decades worldwide. Strict measures must be taken,” Professor The Anh stated clearly.
To mitigate tax risks when selling unsold inventory without input invoices, household businesses can proactively implement the following measures: Prepare a written explanation of the origin of the inventory, clearly stating the type, time of import, quantity, estimated value, and source of purchase (from contracted households without invoices). Secondly, create a declaration form according to Circular 78/2021 recording the cost of goods purchased without invoices (purchased from individuals or contracted households), which serves as the basis for calculating the cost of goods sold during the period of using electronic invoices. Thirdly, declare and pay taxes in full when selling unsold inventory.
- Lawyer Nguyen Quoc Toan, Director of IAM Law Firm
Article source: Thanh Nien Magazine