Different Views on Tax Costs

 

She said that the ratio of taxes and compulsory insurances to net profit in Vietnam was 35.2 per cent in 2014, of which 11.5 per cent was taxes and 23.7 per cent was compulsory insurances. The average ratio of ASEAN+6 nations was 31 per cent, 4.5 per cent lower than that of Vietnam. However, Vietnam's tax ratio of 11.5 per cent was much lower than the average of ASEAN+6 countries with 20 per cent, of OECD countries with 16.1 per cent and of the Asia - Pacific region with 16.4 per cent, but Vietnam’s compulsory insurance ratio of 23.7 per cent was more than double the average of ASEAN+6 countries.

 

“In 2016, due to a decline in corporate profitability, the ratio of taxes and compulsory insurances increased to 39.34 per cent. Specifically, corporate income tax fell from 22 per cent to 20 per cent, but the tax ratio climbed to 14.53 per cent and compulsory social insurances shot up 24.81 per cent,” said Cuc.

 

She said the above results are accrued from drastic actions of the Government and relevant ministries and branches, particularly the Ministry of Finance and the General Department of Taxation. The Vietnamese business environment climbed up three places (to 93^rd rank to 90^th rank) in 2016 and the tax index jumped five places to the 173^rd position from the 168^th position in the ranking compared to 2014. Sharing Cuc’s viewpoints, Ms Nguyen Minh Thao, Deputy Director of the Business Environment Committee under the Central Institute for Economic Management (CIEM), also said that nearly 40 per cent of corporate expenses come from taxes and mandatory insurances. Thus, the prejudice towards ultimately collected taxation is not right indeed. Ms Hoang Thi Lan Anh, Deputy Director of the Reform and Modernisation Committee under the General Department of Taxation, said, to further improve the business environment, the General Department of Taxation has launched two solutions.

Regarding policy institutions, the General Department of Taxation will build regulations and database to apply risk management mechanisms to all stages of tax administration; draft decrees on transfer pricing and tax evasion; develop the regulatory basis and technical infrastructures for deploying electronic invoices; research and develop a roadmap on replacement of lump sum tax with corporate income tax, personal income tax to employing companies and personal income tax paid by employing companies for employees.

 

The second group of solutions is modernising tax administration, that is to say, applying information technology to achieve the target of at least 95 per cent of tax declarations and payment forms made electronically; receive and reply tax refund forms electronically, publicise tax refund data, and ensure 100 per cent of tax reimbursement dossier checked; grant tax codes automatically to taxpayers; build a database of taxpayer classification, evaluation and rating on the extent of compliance for the purpose of risk assessment; and deploy one-stop electronic service at tax authorities.

 

The Ministry of Finance is studying ways to reduce costs for enterprises, including land rent cut and rescheduled land rent payment, said Ngo Huu Loi, Director of Legal Affairs Department under the Ministry of Finance, while mentioning the execution of Resolution 19-2016/CQ-CP and Resolution 35/NQ-CP of the Government.

He added that, to support enterprise development to 2020, reducing business costs for enterprises is a big task. Authorities are calculating and assessing legal provisions on land and financial obligations thereof to propose solutions for rent and other expense cuts.

 

In addition, the Ministry of Finance is coordinating with the Ministry of Natural Resources and Environment to propose mechanisms in support of companies accessing land in industrial zones and paying land rents flexibly, he added. In previous years, the ministry actively had measures to help enterprises deal with difficulties to boost production and business operations. This has generated and nurtured income sources.