Economic Sector

Last updated: Thursday, February 21, 2019


Tax Procedures Result in Lowest Compliance Cost in ICPI 2018

Posted: Monday, September 17, 2018

On August 27, 2018, the General Department of Taxation made public a press release on assessment criteria in the Administrative Procedure Compliance Cost Index (APCI 2018) launched by the Advisory Council for Administrative Procedure Reform of the Prime Minister. The APCI Report 2018 is based on the analysis of achievements of the Government’s past-year administrative reform in eight groups of administrative procedures important to business: Business startup/business registration; tax; investment; practice certificate; customs; land; environment; and construction to assess actual costs that companies and organisations pay for carrying out statutory administrative procedures and identify the room for further reforms.

Specifically, APCI illustrates two main types of costs paid by businesses to have administrative procedure done: Time cost needed from the start to completion of administrative procedures, and direct cost paid in cash by enterprises to have administrative procedures done. By APCI’s definition, a low compliance cost for an administrative procedure or a group of administrative procedures is good.

Tax-related administrative procedures assessed include fulfilment of bankruptcy obligations; settlement declaration of corporate income tax, and withholding VAT declaration. According to evaluation results, tax-related administrative procedures have the best rankings (the lowest compliance cost) among eight administrative groups surveyed. The average compliance cost in this sector is lowest (about VND73,700) and equivalent to only 0.58 per cent of the average compliance cost of eight groups of administrative procedures (VND12.7 million) and 0.1 per cent of the average compliance cost of the worst performer - the construction sector (VND64.1 million).

The average time of carrying out tax administrative procedures is 2.9 hours, equal to only 1.3 per cent of the time spent on environmental administrative procedures (218.4 hours) and 4.6 times the average time of all groups of administrative procedures (63.3 hours).

The direct cost of tax administrative procedures is rated zero or insignificant thanks to internet-based execution of administrative procedures. The low compliance cost of tax administrative procedures results from tax sector modernisation powered by information technology application to management and increased communication and guidance on administrative procedures to taxpayers. At the same time, since 2011, the tax branch has drafted and deployed the tax system reform strategy in 2011-2020 approved by the Prime Minister. Accordingly, at least 95 per cent of tax declaration forms are submitted electronically and online public services are applied at Level 3. In addition, the tax sector was among the first to actively gauge business satisfaction with administrative procedure reform in a bid to understand their troubles with administrative formalities to make necessary fixes.

A representative from the General Department of Taxation said, to further reduce tax administrative procedures, the tax sector is reviewing and assessing jobs and procedures likely to be further reformed to facilitate enterprises. Specifically, after analysis, tax administrative procedures consist of five steps: Information search; record preparation; record submission; record modification and supplement; and result delivery. Information lookup and record preparation take most time. Thus, the tax administration will continue to inform and guide taxpayers to fulfil administrative procedures, including guides for online settlement to reduce the time needed to look up information, prepare, edit and supplement records. In addition, the tax authorities will continue to improve IT application to support online administrative procedure settlement to shorten the time of filing documents and getting results.

APCI 2018 is a reform achievement made by the taxation sector, evidenced by the lowest actual cost of carrying out tax administrative procedures amongst costs spent to run a business. The sector’s reform is a good practice for further reform of administrative procedures for people and businesses.

Thanh Nga

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