In a short time, a series of radical tax changes and reforms have produced positive impacts on the business community with the overarching goal of creating the most favourable conditions for production and business operations and improving the competitiveness of the Vietnamese business environment. The tax sector of Vietnam has added efforts to become one of four ASEAN countries with the best tax facilitation. On the occasion of Vietnam Entrepreneurs Day - October 13, Vietnam Business Forum has an interview with Mr Bui Van Nam, General Director of the General Department of Taxation. Le Hien reports.
Could you please tell us how fundamental changes in tax policies and tax procedures have influenced businesses?
Needless to say, tax changes and reforms have been carried out the most strongly in recent years, stemming from actual and inherent requirements internal of the tax sector. In 2014 and 2015, the General Department of Taxation and the Ministry of Finance studied on amending some tax policies and administrative procedures to reduce compliance costs and time for enterprises. And, the simplification proposal was based on meticulous study on best international practices, Vietnam's practical practices, information technology application conditions of the tax sector and qualifications of taxpayers.
On that basis, the sector advised Government to submit to the National Assembly to issue five amended laws, submitted to the Government to issue four decrees and seven circulars. In 2015, the Ministry of Finance promulgated four circulars (No. 92, 96, 110 and 127/2015/TT-BTC) on simplification of many tax administrative procedures. The tax sector signed agreements with 41 commercial banks to deploy electronic tax declarations to reduce time and procedures required for tax payment.
In 2016, the Ministry of Finance has continued to advise the Government to submit to the National Assembly to pass the Laws on Amendments and Supplements to some articles of the Law on Value Added Tax, the Law on Special Consumption Tax and the Law on Tax Administration. At the same time, tax authorities are finalising regulations on application of risk management in tax administration.
How will tax reductions and bilateral and multilateral trade agreements enforced in Vietnam affect State Budget revenue? What measures have been taken to improve long-term revenue sustainability?
Vietnam’s policy reforms have produced positive results in recent years. The structure of State budgetary income sources has been changed to reduce dependence on oil and export/import tariffs and increase domestically sourced incomes. Besides, more reasonable tax rates and a series of SME stimulus and development measures have helped enterprises to increase their competitiveness, accumulate capital and create long-term revenue for the State Budget. By enacting Resolution 19 (in 2014, 2015 and 2016) and Resolution 35 of the Government, regulations on tax declaration and payment have been simplified to diminish compliance burdens on taxpayers.
To implement directives of the Government and the Ministry of Finance and to ensure State budget revenue, the tax sector is studying and proposing measures to expand the tax base. Accordingly, VAT will have a single rate, while corporate income tax will be lowered to ensure the equality for both domestic companies and foreign companies.
To prevent the erosion of corporate income tax base, Vietnam should enhance the construction of a legal framework for transfer prices, take part in global forum on tax transparency to exchange information or purchase commercial database on independent transactions for reference, comparison and support of tax management concerning transfer pricing.
Revenue from land and properties on land in Vietnam is still too small while it is an important source of State budget incomes. Therefore, the tax service is working to simplify property and land information declared and collaborating with environmental and resources agencies to build database for information exchange and reference.
Would you talk about tax reform orientation towards 2020?
Vietnam’s tax reform orientation to 2020 aims to effectively manage tax on the basis of the transparency of tax policies and simplicity of tax procedures, apply information technology and employ professional and honest personnel; develop various taxpayer support services to enhance practicality and efficiency; strengthen inspection and monitoring to gauge the effectiveness of tax management and ensure State Budget incomes; and raise the satisfaction of taxpayers through surveys.
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