Retailers vexed with VAT implementation
Retailers vexed with VAT implementation
A newly-issued VAT reduction policy has received a positive response from both consumers and businesses, especially businesses in the retail sector – however, not all businesses have the resources available to immediately apply the new rate due to implementation obstacles.
Nguyen Thi Kim Dung, director of Co.opmart in Hanoi’s Ha Dong district, said that Co.opmart’s retail systems started to apply the updated selling price according to VAT, which was reduced from 10 to 8 per cent from the beginning of February. But Dung also admitted that ensuring the change on invoices has not been synchronised entirely.
“At first, the adjustment was difficult to synchronise and the accountants are not proficient enough, but we still try to make sure that when calculating the money, the customers’ bill is reduced according to the regulations,” Dung explained.
Some major cafe outlets in the capital, such as Starbucks and The Coffee House, have not yet updated the VAT rate changes, both citing the need to add more time to adjust the system to the new tariff.
On the purchase invoices at Winmart, which owns nearly 60 supermarkets and about 1,200 Winmart+ stores, they only show the price inclusive of VAT. Customers do not know when viewing the invoice if they are eligible for reduction and how much the reduction is. This situation also occurs currently on the retail bills of fast-food chains such as Lotteria, Thegioididong, and FPT Shop.
A representative of a foreign supermarket chain with two locations in Hanoi said, “We are rushing to achieve the goal that all branded supermarkets can reduce VAT to 8 per cent. However, there are many difficulties due to the large number of products. The supermarket has to filter out tax-reduced items, work with the supplier to fix the price, and then fix the selling price at the supermarket, so it will take more time.”
From February 1, government Decree No.15/2022/ND-CP is applying the VAT drop until the end of the year. VAT is currently the tax that accounts for the largest proportion of the total state budget revenue and this is also the first time that it has been synchronously reduced from import, production to processing, and consumption.
According to calculations from the Ministry of Finance, it is expected that the reduction will reduce state budget revenues in 2022 by about VND50 trillion ($2.1 billion), but will contribute to controlling inflation and supporting economic growth.
Tax reduction will help consumers who are heavily affected in terms of income to save 2 per cent on average spending and help increase transactions in the market. Meanwhile, the seller has conditions to not increase the cost of products or services when the cost pressure increases.
Because the items with the 2 per cent VAT reduction are mostly in the group of essential goods, accounting for 75 per cent of the shopping proportion of consumers at supermarkets, many supermarket systems have quickly adjusted the technology with goods codes eligible for reduction for synchronous deployment. Within four days of Decree 15 being issued, 17 groups of goods according to regulations have had the rate adjusted to 8 per cent.
“This change is not simply going from 10 to 8 per cent but will require a lot of preparation. Initially, the adjustment was difficult to synchronise in terms of the display as some items had not yet been able to change the new price, but we still ensure that when charging, the customer’s bill is still reduced according to regulations,” said Nguyen Ngo Anh Tuan, director of the Dry Food Division of Lotte Mart Vietnam.
Vu Nguyen Diem Thi, marketing director of Saigon Co.op, said its system started implementing the new legislation right after the Lunar New Year. “There are more than 10,000 products in fresh food, fashion, and some household appliances that have the new rate applied,” Thi said.
At the Tops Market supermarket system, the updated selling price according to the new rate is also applied to about 12,000 products. The GO! and Big C supermarket system will also have over 20,000 products given the reduction, including in dry food, beverages, milk, confectionery, fashion, and household goods.
According to Nguyen Thi Mai Phuong, CEO of Big C & GO!, 7 out of 10 customers entering the supermarket will benefit from the government’s tax reduction programme, and businesses’ financial performance will not be affected and can still stimulate demand.
