An annual dialogue with enterprises on tax and customs services, rganized by the Ministry of Finance (MoF) has become an important information exchange channel. This has helped the taxation and customs services to understand difficulties and urgent issues of enterprises when observing customs and taxation policies, so as to develop suitable solutions to better serve the development of enterprises.
By September 2005, the taxation and customs services had rganized regular dialogues with around 20,000 enterprises with 95 per cent of 5,000 questions raised by enterprises having been settled. Questions and issues which are within the authority of the Ministry of Finance have been settled with the issuance of around 100 legal documents, applied nationwide.
Themed ‘Continuing to create favourable taxation and customs conditions for enterprises,’ this year’s dialogue attracted over 300 enterprises. In their talks with the General Department of Taxation, many enterprises complained about slow value added tax refunding. Enterprises, on one hand, do not receive any interest due to slow refunding. On the other hand, they will be fined if they pay tax even one day late. A representative of the Nam Long company said that with long tax refunding as enterprises have their tax refunded after between two and four months, they face a difficulty due to capital stagnancy. Therefore, when enterprises send their documents to taxation agencies, money to be refunded will be cleared after documents are checked.
A representative from the Vietnam Chamber of Commerce and Industry (VCCI) stated that each month enterprises declare their value added tax, but taxation agencies cannot check enterprises’ declarations to adjust errors for several years. When enterprises have settled their tax payment, tax agencies come and check, then execute tax debts. This causes many difficulties to enterprises, leading to a capital shortage. Some enterprises have suffered losses. Representatives from some enterprises (from the Vietnam Insurance Association) proposed that value added tax of insurance should not be collected according to the international practice. MoF received proposals on suitable policies on tobacco production for job creation and budget revenue increase (by the Vietnam Tobacco Association), and proposals on removing a cap of marketing and advertisement costs (by BP Vietnam and a branch of the Southern Freight Forwarding Company) to report to the National Assembly for consideration.
In the customs service, according to a representative from the Southern Freight Forwarding Company, conflicts often occur during customs declaration, causing difficulties to enterprises. There are many declaration guiding documents for customs agencies only that enterprises are not aware of, leading to imprecise declarations. Therefore, enterprises propose that guiding documents should be publicly announced for both customs agencies and enterprises, thus facilitating their tax declaration and calculation. Representatives from the Lifan Vietnam Motor Joint venture Company and the Mechanic Import and Export Joint stock Company said that there was a big difference between taxable prices set by the General Customs Department and actual prices. The Mechanic Import and Export Joint stock Company and the Military Material and Technology Company stated that customs agencies coerced lots of goods whose tax had been paid. Many enterprises had been coerced to pay tax, which they had already paid or had import tax exemption documents.
At the meeting, representatives from the General Department of Taxation, the General Customs Department and the Ministry of Finance answered questions raised by enterprises or promised to send written answers to enterprises’ questions.
However, according to deputy Minister of Finance Truong Chi Trung, the taxation and customs services still have to overcome shortcomings to catch up with the development of the business community. Legal documents issued by taxation and customs services are not detailed enough, in particular about the list of imported goods with priorities and taxable prices, resulting in conflicts between taxation and customs agencies and enterprises. The capability of staff members of customs and taxation agencies has yet to match requirements of modern management, especially in explaining policies, import and export codes, taxable price calculation, tax refunding, and inspection of violations.
Apart from the shortcomings of the taxation and customs agencies, enterprises have exposed their weaknesses. This results from the fact that there are many enterprises, which do not have a good understanding of the law, so they make mistakes or violate the observation of the State’s policies. Also, some enterprises help taxation and customs officials to take advantage of legal gaps by evading tax.
Renewing taxation and customs policies is a top task of the MoF. According to Deputy Minister Truong Chi Trung, Vietnam will have a unite value added tax rate in 2008 and adjust special consumption tax suitable with regulation objectives and consumption guides. Trung said that in the short term, the Government will submit its proposals on the amendment of some regulations of the Law on Value Added Tax and the Law on Special Consumption Tax to the National Assembly which is to take effect in 2006. Accordingly, discrimination will be removed in meeting the requirements of Vietnam’s accession to the WTO, mainly relating to such imported items as cars, alcohol, tobacco, draught beer, cotton, unprocessed farm-produce and seafood.
Before the end of this year, the MoF will submit a list of import and export tax rates according to groups of goods, issuing import and export tax priority lists to the Government and the Standing Committee of the National Assembly, which are to be implemented from 2006. The tax rate of each good code will be clarified according to the international standard with committed tariff cuts.
Regarding the taxation and customs management, the MoF will concentrate on guiding a unified mechanism for tax declaration, calculation and payment. In the short term, it will be used in 10 provinces and cities, as well as large-sized enterprises in other localities to ensure that they are all managed under this mechanism. Also, the online tax registration services will be expanded alongside the preparation of equipment and human resources to put such services into operation in the coming years.
Forum
Interest should be cut and the debt payment period should be extended for water supply enterprises, Nguyen Ton, chairman of the Vietnam Water Supply Association
At present, official development assistance (ODA) capital accounts for around 70 per cent of capital invested in water supply and drainage works. Debt payment and interest account for 30 per cent of total ODA capital. Investment capital of water supply work is often huge. Without support from the State, safe water supply enterprises cannot sell water at a price as low as VND 8,000 per cubic metre. The Ministry of Finance has proposed solutions for ODA capital payment to the Government as water supply enterprises cannot pay their debts if they continue to sell the water at the existing price. I propose that the Ministry of Finance extend the payment period and cut interest (the previous interest rate was put at six per cent) for water supply enterprises to be able to repay their ODA capital.
Input check-up should be promoted for private enterprises, which import electronic goods, Nguyen Trong Binh, deputy general director of LG Electronic Vietnam
At present, prices of completely built electronic goods are lower than prices of locally assembled ones, so many enterprises are taking advantage of international integration for tax evasion purposes. With increasing high import tax rates imposed on accessories, local assembly enterprises have faced many capital difficulties. This has created an unfair competition in the market. Therefore, I propose a promoted check-up of the imported input of private enterprises. Local assembly enterprises are even ready to contribute money to help the Ministry of Finance and customs agencies to promote their supervision and check-up works with the input of private enterprises which are involved in importing completely built electronic goods. Also, import tax on electronic accessories from ASEAN countries is lower than those from other countries. Import tax on accessories form ASEAN countries is lower than import tax on completely built units. Therefore, the Ministry of Finance should adjust its tax rates to create favourable conditions for local assembly enterprises to develop their production and business activities.
HCM City customs agencies are not flexible enough, Bui Van Thong from Haiphong Trading Company
Our Ho Chi Minh City-based branch imported spirits from the 2005 Lunar New Year. Ho Chi Minh City customs agencies imposed new prices on our imports after completing all procedures. Accordingly, the taxable price the branch had to pay increased to VND 1 billion. We sent documents and letters to Ho Chi Minh City customs agencies to settle the problem but our efforts were in vain. We sent our letters to the General Department of Customs and had a working session of leaders of the general department. Then, the general department provided guidelines on the settlement of our company’s issues. However, so far, the issues have yet to be settled. I propose that tax coercion should not be imposed when the issues are addressed so that our company can maintain our activities. Ho Chi Minh City customs agencies’ imposition of taxable prices does not match with the existing policies of the General Department of Customs and the Ministry of Finance.
Tax refunding remains slow, a representative from the Vietnam Labour Export Association
There are yet to be any concrete and timely regulations on procedures for tax refunding in labour export activities. Under the Law on Value Added Tax, labour export enterprises enjoy a tax rate of 0 per cent, providing that their payment should be made via banks and there are customs declaration documents to prove the export of goods. However, the specific feature of guest workers sending services is that workers pay in cash and there are no good export declaration documents as labour is a special kind of commodity, different from normal ones. Labour export enterprises face many difficulties in completing procedures to have their value added tax refunded.
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