Tax Reform Seen as Remarkable

According to PCI 2015 surveys, 10.6 per cent of domestic firms planned to increase their operations after two years. “For the first time in 10 years, inflation-adjusted average investments rose to VND16.5 billion (US$750,000), the highest level in 10 years, and well over twice the amount recorded in 2006. The number of firms adding employees rose to almost 12 per cent, double the record low levels of 2012,” said Mr Dau Anh Tuan, Director of VCCI Legal Department.

 

Besides, the survey showed that companies are more optimistic about business prospects. As many as 49 per cent of companies surveyed planned to expand operations in the next two years, up 3 per cent over 2014 and 16 per cent over 2013. This is the highest level of this indicator in five years since the PCI Report was published. The report said although Vietnam is integrating more deeply into the world economy, a vast majority of enterprises have small and medium scales and primarily operate in domestic market without much interest in approaching export markets. Only 3 per cent of micro-enterprises, 4 per cent of small enterprises and nearly 9 per cent of medium-sized enterprises have foreign customers.

 

The PCI 2015 showed that the business community particularly recognised the efforts of the finance sector in tax procedure reform. Currently, the tax inspection time has been dramatically reduced from 8 hours to 4.5 hours per inspection on average. This is considered the shortest duration in three years. Besides, investors appreciate the stability of Vietnam's tax policies and its more incentives than other countries in the region and in the world.

 

Remarking on results achieved in improving the business environment, national competitiveness in general and tax reform in particular, Mr Ted Osius, United States Ambassador to Vietnam, said that this is the 11^th time VCCI cooperates with the US Ambassador to publish the PCI, a gauge that measures and ranks the quality of economic governance by provincial/municipal governments in Vietnam, and this is the first time most of companies have good feedbacks to substantial progress in tax procedures. Undoubtedly, the simplification and facilitation made by tax authorities won the trust of local businesses.

 

Many economists stressed that reforms of institutions, tax administration and tax administrative procedures in recent years have basically met and ensured international integration requirements. Companies feel satisfied with the simplification of administrative procedures, the diversification of tax payment forms, electronic tax declaration and better risk management at all stages. Nevertheless, some indicators disappointed the business community. For example, informal charges increase year after year, from 50 per cent in 2013 to 64.5 per cent in 2014 and 66 per cent in 2015.