This is not a proposal to return to the previous presumptive tax. Under the Association's approach, the fixed tax could be determined either as a percentage or an amount calculated by tax authorities based on data, average profit margins of each sector/industry, and the scale of the business.

In other words, while the old presumptive tax was not applauded because it relied heavily on estimation, negotiation and subjective judgment, the new fixed-tax model would be designed on a foundation of data, transparency, and clear criteria.

The tax rate, therefore, should not be the result of negotiations between business households and tax officials. Instead, it must be based on verifiable parameters such as revenue, industry, location, average profit margins, and transaction history.

This is the key differentiator. The State maintains control over tax obligations, while business owners are relieved from the burden of the entire procedural system currently in place.

The greatest value of this proposal lies not in whether businesses pay more or less tax, but in the significant reduction of compliance costs.

No lax management

A common concern is whether a fixed tax or a simpler declaration mechanism would increase tax losses for the state budget. A clear distinction must be made between tax reduction and compliance cost reduction. They are not the same.

According to calculations by VINASME, technology and management costs incurred by tax authorities themselves could range from VND6,460 to 19,382 billion annually.

While these figures still need verification through independent studies, they raise question: Is a tax system truly optimized if its operational costs are this substantial?

Alongside the fixed tax, the Association also proposed a minimalist tax declaration. Thr Association is not suggesting the abolition of tax declarations, but rather streamlining how they are done.

One recommendation is a "pre-filled tax return", similar to how tax authorities currently handle personal income tax. Based on available data, the tax office pre-fills the tax return; taxpayers then only need to check, confirm, or adjust if there are discrepancies, rather than compiling the entire dossier from scratch.

If properly executed, this approach could save millions of business households significant time while reducing the workload for tax authorities. 

The smaller the business, the simpler the procedures

In reality, many countries face similar dilemmas. OECD experience compiled by Economica shows that instead of applying a single tax regime across the board, many nations design simplified mechanisms exclusively for micro-businesses and household businesses.

The methods may vary. Some countries calculate tax based on revenue, some apply estimated income, and others allow abbreviated accounting and declaration regimes.

Regardless of the design, these models share the same philosophy: the smaller the business, the simpler the procedures must be.

The goal is to reduce the cost for citizens to fulfill their obligations. If compliance costs are too high, small businesses can easily be pushed out of the formal sector or seek ways to evade regulations.

An effective tax system is therefore evaluated not only by its ability to collect the right and full amount of tax, but also by its ability to foster voluntary compliance from taxpayers.

When procedures are simple, citizens have less incentive to evade. When compliance costs are low, tax authorities also save resources on auditing, explaining, processing, and enforcement.

Simplifying to collect more

Dr. Le Duy Binh from Economica argues that to reform taxes, it is necessary to correctly define the legal status of individual business households. This is a business type that differs vastly from corporations in terms of scale, organization, and management capacity.

Currently, the majority of household businesses are essentially individuals or families operating on a very small scale.

On average, each household employs only about 1.5 workers. The head of the household is the salesperson, the manager, the buyer, the cashier, and often the bookkeeper.

Therefore, the accounting, tax, and management regimes for this sector should not be molded in the same fashion as corporate standards.

If approaching this with a "one-size-fits-all" policy mindset, the bottlenecks regarding compliance costs will be extremely difficult to resolve.

Following the debates over the old presumptive tax, perhaps what is more worth discussing is no longer whether to keep or scrap an old mechanism, but how to design a better new one.

Tu Giang - Lan Anh