Perfecting the value added tax law in Vietnam in the current period

legal reform combined with the application of the basic viewpoints of the Party and State on economic innovation, state management of the economy, perfecting the economic legal system towards proactive integration into the regional and world economy, specifically the viewpoint of reforming the tax system and tax law. At the same time, the thesis uses abstract thinking methods, methods of analysis, synthesis, comparison, interpretation, induction and verification... to solve the problems raised in the thesis.

5. Structure of the thesis

In addition to the introduction, conclusion, list of references and appendix, the content of the thesis includes 3 chapters:

Chapter 1 : General theoretical issues on value added tax law.

Chapter 2 : Value added tax law and current status of value added tax law in Vietnam.

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Chapter 3 : Principles, directions and solutions to improve value added tax law.

Chapter 1‌‌

GENERAL THEORETICAL ISSUES

ON VALUE ADDED TAX LAW

1.1. CONCEPT AND CHARACTERISTICS OF VALUE ADDED TAX

1.1.1. Concept of value added tax

The emergence of taxes is an objective necessity, closely linked to the birth, existence and development of the state, because taxes are the material resources that ensure the state's existence and the performance of its functions and tasks. F. Engels pointed out: "To maintain public power, it is necessary to have the contribution of citizens to the state, which is taxes..." [30, p. 552]. Mobilizing to concentrate social wealth into the hands of the state can be done in many different ways: compulsory contributions, mobilizing people to contribute voluntarily or borrowing, but taxes are a collection relationship through measures to mobilize and concentrate wealth that are compulsory for all members of society. The determination of taxes and the direct implementation of tax collection by the state are one of the basic signs of the state, along with other signs that make the state different from pre-state organizations as well as organizations that exist alongside the state in the political system of a country.

From an economic and financial perspective, tax is understood as a mandatory contribution from individuals and legal entities to the state at the level and time limit prescribed by law for public purposes [21, p. 5].

From a legal perspective, tax law experts consider tax to be the legal obligation of organizations and individuals to transfer a portion of their assets to the state budget when all the constituent elements prescribed by tax law are present [28, p. 7].

Although there are many ways to define tax, we can all see the following common feature: tax is a mandatory payment that organizations or individuals must pay to the state when certain conditions are met [52, p. 10].

Taxes initially appeared in a very simple form of expression in the form of objects such as corvee relations and tributes, then gradually changed to the form of value. Along with development, more complex types of taxes and forms of taxes were gradually formed. When social production developed, labor productivity was improved and the state's spending needs increased, the state constantly improved and supplemented types of taxes to manage the economy and increase its revenue. Currently, tax issues are not only limited to each country but also have an international dimension. Therefore, one of the important contents in establishing relationships between countries, regions and globally is the issue of taxation.

Before VAT, countries applied turnover tax, however, this type of tax had the disadvantage of duplication because the tax was levied on the entire revenue of the process from production to consumption. The more stages the product went through, by many different production and business establishments, the more tax was paid on a unit of product because the tax was levied on revenue and was calculated multiple times. To overcome this disadvantage, in 1936, France improved turnover tax from being calculated and paid at each stage to being calculated and paid once at the final stage of the production process (ie before the product was put into circulation for the first time). Such a one-time independent tax overcomes the phenomenon of duplication, but this method of calculation gives rise to the disadvantage that tax collection is delayed compared to before, because the State can only collect tax when goods are put into circulation.

Faced with the reality that the State wants to collect a lot of taxes and collect them on time, and also wants to promote production development to foster revenue sources for the

In the later period, economists have continuously revised and supplemented the turnover tax to make it more and more perfect. Based on the one-time turnover tax before putting the product into circulation, in the early fifties, a German named Carl Friendrich Von Simens came up with a tax policy that could replace the turnover tax, which is the VAT calculated on the added value of goods and services when going through each stage from production, circulation to consumption. The birth of this tax marked a new way of thinking and would overcome the disadvantages of the turnover tax mentioned above.

Although born in Germany, at this time the arguments of Carl Friendrich Von Simens were not convincing enough to the Government so VAT was not first implemented in Germany.

In fact, VAT was first researched and applied in the French Republic on July 1, 1954 because France is one of the countries with a highly developed industry (carried out the industrial revolution early), on the other hand, France is also a country that is very interested in the financial sector, with the focus of innovation being indirect taxes. Initially, VAT in France was only aimed at a few specific industries, it was not until 1968 that VAT was applied to all industries and in all fields.

The strong development of the market economy has proven the success of regulating the economy mainly by indirect methods. In that context, with the special advantages of VAT, it has been quickly deployed and widely applied. Particularly in Asia, it can be seen that VAT is increasingly becoming a popular tax in this region. Starting in Korea (1977) and soon after that, many countries have applied it such as Indonesia (1984), Taiwan (1986), Philippines (1988) ...

Currently, many countries in the world have switched to applying VAT to unify and modernize their tax structures. Member countries of the European Union have chosen VAT as a good solution.

unified taxation, encouraged industrialization, modernization and increased labor productivity. When included in the tax law system, revenue from VAT has become a decisive part of total revenue for countries using it.

The term VAT, in English is Value Added Tax (VAT), in French is Taxe Sur la Valeur Ajoutee (TAV), is often used to refer to a type of indirect tax, calculated on the added value of goods and services arising in the process from production, circulation to consumption. Because the tax is calculated on the added value of goods and services, the taxpayer must be the establishments producing and trading in goods and services with added value, but in fact the tax they pay is paid by the buyer of the goods and services when paying for the goods and services.

1.1.2. Characteristics of value added tax

Based on the characteristics of VAT, we can identify VAT with other taxes.

First , VAT is an indirect tax.

From an economic and financial perspective, indirect tax is a tax that is not directly levied on the income and assets of the taxpayer but is levied indirectly through the prices of goods and services [21, p. 3]. From a legal perspective, indirect tax is understood as a type of tax in which the tax bearer is the customer, but the taxpayer is the seller or importer [52, p. 15]. In other words, indirect tax is when the consumer (taxpayer) transfers a part of his/her assets to the state budget through a third party - the producer or trader (taxpayer).

In the three-way relationship: the state, the taxpayer and the taxpayer, the taxpayer plays the role of intermediary in collecting taxes for the state and then paying them to the state budget.

Regarding VAT, production and business establishments collect VAT when selling goods and services. VAT is calculated based on the selling price of goods and services and the buyer must pay it in the payment price of the goods and services. After selling goods and services, production and business establishments pay tax to the State budget on behalf of consumers. Thus, the buyer does not directly pay VAT to the State budget but pays tax through the payment price of goods and services to the seller, which includes VAT. The seller pays the VAT payable (already paid by the buyer) to the State budget. Because the VAT payers and the VAT-liable subjects are not the same, VAT is considered a typical indirect tax.

The difference between taxpayers and taxable persons leads to different legal status of each subject, with different rights and obligations. Therefore, for VAT in particular and indirect taxes in general, the distinction between taxable persons and taxpayers is very important from a legal perspective.

In many cases, the VAT payer is also the VAT tax payer, of course, for different goods and services. For example, a production and business establishment purchases VAT taxable goods and services for consumption, not for production and business purposes, then the production and business establishment is the VAT payer. As for goods and services produced and sold by the establishment, the business establishment is the tax payer. The difference in legal status affects the rights and obligations of each entity, such as in the role of a consumer (taxpayer), a business establishment is not allowed to deduct input VAT on goods and services purchased for consumption purposes.

Second , VAT is only levied on value added.

VAT is only levied on the added value of goods and services at each stage of production, circulation and at the end of the production, business or service cycle.

providing services. Tax is imposed at all stages, but the basis for determining the amount of tax payable is only the newly added value of the following stage compared to the previous stage. Therefore, if the payment price is considered to be calculated when the consumer enjoys the goods and services as determined in advance and unchanged, the value of the goods and services is divided and taxed, the total VAT payable through the stages is the final tax calculated on the total value of the goods and services that the consumer bears. Specifically, at different stages of the economic cycle, the person with tax obligations must calculate and issue invoices to customers to pay VAT on the goods and services being transferred; deduct the tax paid for the components of the cost or expenses and only pay to the State Treasury the difference between the tax shown on the invoice to the customer and the deductible tax. Therefore, VAT is closely related to price, being a factor in the selling price of goods and services. Taxing only on the added value and not on the entire value of goods and services ensures that the VAT applied at each stage of the circulation process does not cause price fluctuations for consumers. This characteristic of VAT also requires the regulatory law to find appropriate and feasible ways and methods to accurately determine the added value as the basis for tax calculation.

It can be seen that the current VAT Law in our country as well as the VAT Law of other countries in the world determines the added value through the selling price. However, it is necessary to distinguish that the monetary expression (selling price) of goods and services is the exchange value and does not reflect the real value of those goods and services. Exchange value is a form of expression of value but is not identical to value. In many cases, the added value but the exchange value remains unchanged, such as people can further process the goods but the selling price remains unchanged, or vice versa, the value does not increase but the exchange value increases, this depends on the use value of the object, the taste of customers and the supply and demand relationship in the market (not in the same ratio) between value and exchange value, meaning there is a relative separation between value

exchange and value. On the other hand, value has individual value for each producer, but exchange price is only the general recognition of society at a certain point in time for products of the same type and characteristics [28, p. 9].

Third , VAT has a wide scope of regulation.

VAT is collected from all organizations and individuals who consume goods and services through the purchase and sale of goods and services.

Ultimately, the subject of VAT regulation is the portion of consumer income used to purchase goods and services. Therefore, in principle, VAT is only levied on the final stage of consumption, not on the production and business stage, so it is sufficient to collect tax only at the final stage of selling goods and services. However, in reality, it is very difficult to distinguish between final consumption and intermediate consumption, so VAT must be calculated for every act of transferring assets or providing services. If it is intermediate consumption, the tax will be automatically transferred to the selling price for the buyer at a later stage.

The person subject to VAT is the final consumer of goods and services subject to VAT. The final consumer is the person who uses goods and services not for the purpose of creating other goods and services and making those goods and services escape the circulation cycle. The scope of VAT taxable persons is very broad. All subjects existing in society, whether organizations or individuals, people with low or high incomes, doing whatever and wherever, when purchasing goods and services subject to VAT for consumption must pay the business a VAT amount along with the selling price of the goods or services to be purchased. Even the businessmen themselves, if when consuming goods and services subject to VAT but not for the purpose of creating other products or services, are the ones subject to VAT. Because at this time, the businessmen as the final consumers of goods and services must pay VAT. The taxation of all subjects within the territory clearly demonstrates the fairness of the tax.

Perfecting the value added tax law in Vietnam in the current period - 2

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