Ho Chi Minh City wants luxury tax on mobile phones

The People's Committee has just sent the Ministry of Finance suggestions for a draft proposal on "expanding tax base and preventing erosion of state budget revenue".

It called on lawmakers to add items such as cameras, perfumes, cosmetics, gaming services, and beauty services to the list of items subject to the tax. This would help tax the population with above-average income, it said.

While admitting mobile phones are not luxury goods, it said they do not fall within the definition of "essential" either. Special consumption tax is only levied on certain goods and services that are considered to be luxury or non-essential.

Besides, too many items are exempt from value-added tax (VAT), the people’s committee said. Normally countries have some four to eight groups of excluded items, but Vietnam has 25, it pointed out.

The government needs to consider eliminating some of them, and only exempt goods and services on which it is difficult to calculate VAT, such as bank loans and securities trading, and goods and services paid for by the state such as weapons and military equipment, it said.

The normal VAT rate is 10 percent though a 5 percent rate applies to certain goods and services.

With regard to income tax, the city wants to cut some amounts of the tax and adjust family allowances for the middle class to avoid too heavy a tax burden for this demographic.

Vietnam imported $3.6 billion worth of phones and phone components in the first four months of 2019, down 15.5 percent over the same period last year, according to the General Statistics Office.