The Ministry of Finance proposes to raise VAT to 11% by 2019

The Hanoitimes – As of January 1, 2019, the value added tax (VAT) will be increased from current level of 10% to 11%, while this tax rate will go up to 12% since January 1, 2020. As proposed by the Ministry of Finance, the roadmap for VAT increase will be taken in phases. Specifically, with the current VAT rate of 10%, the new increased tax of 11% would take effect starting in January 1, 2019, and this tax rate will be increased to 12% one year later.     Tax hike is aimed to tackle rising public debt. The Ministry of Finance referred to international practice as reason for this proposal. With this regard, in the context of rising public debt in many countries in the world, countries tend to restructure sources of state revenue through increasing indirect taxes. Moreover, the trend of increasing VAT rate is quite common, as a number of countries have approved tax hike in period 2009 – 2016.  Specifically, the average tax rate of European Union (EU) member countries in 2000 was 19%, this number had increased to nearly 21.5% in 2014; member countries of the Organization for Economic Cooperation and Development (OECD) have had similar moves with the average VAT of 18% in 2000 increased to 19% in 2014. Asian countries also restructure the sources of state revenue with an increase in VAT such as Philippines, India or Japan.  According to statistics from the World Bank, countries with income level lower or equivalent to…

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