Tax Reform and Taxpayers

 

V1000 - the orderly ranking of 1,000 biggest taxpayers in Vietnam in 2015 - was recently released by Vietnam Report Joint Stock Company, online newswire VietNamNet under the Ministry of Information and Communications and Tax Magazine under the General Department of Taxation. This is the sixth consecutive year V1000 was released, based on data collected, reviewed, processed and verified by independent agencies. V1000 combines information provided by relevant agencies and crosschecked by feedback data of enterprises to the Vietnam Report.

 

Military-run Viettel Group continued to be the biggest taxpayer to the State Budget in 2015. Viettel is one of the best-performing State-owned enterprises (SOEs) today. In 2014, the group attained revenues of VND197 trillion, up 20 percent year on year, and earned a pre-tax profit of VND42 trillion, an on-year growth of 15 percent.

 

Top 10 saw four new faces, namely Unilever Vietnam International Ltd, Samsung Electronics Vietnam Ltd, Mobifone Telecommunications Corporation, and Vietnam Oil and Gas Group (PetroVietnam) while other six companies already appeared in the 2014 ranking. That reflected of companies’ ongoing efforts not in business development but also in their fulfilment of obligations to the nation.

V1000-listed companies paid VND82,344 billion of tax to the State Budget, up 2.34 percent from 2014 (with VND 80,460 billion), accounting for 10 percent of State budget revenue in 2014, according to figures from the General Statistics Office. Top 100 companies paid more than VND50 trillion, making up more than 60 percent of taxes paid by V1000 companies in combination.

 

SOEs always play an important role in V1000. This year, 229 SOEs entered the ranking list and accounted for about 45 percent of V1000 total corporate income tax. However, this contribution significantly declined from last year’s contribution of 65.6 percent. These figures still showed relentless efforts of SOEs for effective production and business development. Besides, this decline partly mirrored the progress of equitisation of SOEs.

 

Notably, telecom and ICT sector was the biggest contributor with 18 percent of tax although they accounted for just 4.6 percent of companies. The runner-up was the financial sector, with 76 businesses in the list and 14 percent of the tax share. The food, drink and tobacco sector has the most names in the list with 110 companies but its tax share was just 11 percent, ranked fourth among rated industries.

 

The tax service has worked hard to carry out a so-called deep reform to create a transparent tax environment, minimise troubles against businesses and improve a conducive business environment to lure more domestic and foreign investors. However, the current tax system is not really “satisfies” businesses and should be further streamlined and reformed to get more positive feedbacks.

 

In 2014, taxpayers still faced some major issues and problems relating to tax. Up to 33 percent of companies surveyed said they had problems with tax regulations and policies; 16 percent of companies complained about cumbersome forms; 13 percent though administrative procedures were complicated; 12 percent displeased with tax inspection works; and 11 percent were caught problems with online tax declaration.

 

Up to 61 percent of companies surveyed expected a further reform of tax procedures and process as they wanted to see a better taxation system. 26 percent hoped to see slight changes in the tax system and 13 percent of respondents felt satisfied with the current tax policy.

 

These figures showed that tax reform is not an easy and rapid process although the entire tax service has made remarkable efforts for improvement. Legal documents and processes are not new as it always requires a long time and continuous effort and determination of all stakeholders, including businesses.

 

Also according to surveys, up to 27 percent of companies expected more simple administrative procedures and 16 percent of respondents hoped that tax authorities would apply information technology to tax procedures. Businesses were also displeased with the capacity of tax officers and the transparency of tax administrative procedures now.

 

According to V1000 Organising Committee, 9 percent of enterprises hoped to take part in law-drafting and amending process, led by private and foreign-led sectors - two driving sectors of Vietnamese economy. The expected involvement in business/tax lawmaking process reflected their high concerns about tax regulations and policies. Their expectation was reasonable because they raised practical issues and provided actionable advice to lawmakers.

 

According to statistics, nearly half of the respondents (49 percent) feel that they will have benefits from tax policy changes once Vietnam has signed the Trans-Pacific Partnership (TPP), showing the trust of the business community in a bright future when they compete face to face with more foreign rivals. 42 percent believed that they will not be affected when the TPP is adopted. However, 9 percent feel pessimistic when they see negative effects from tax reform that is based on this historic agreement.