Enhancing Support for Business Community Amidst Adversity

In 2023, Vietnam’s economy encountered a multitude of challenges and difficulties. Amidst these circumstances, a variety of policies were promptly enacted and efficiently implemented, notably fiscal measures designed to bolster both individuals and enterprises. As we usher in the Year of the Dragon 2024, our reporter has an interview with Finance Minister Ho Duc Phoc about these matters.

Could you elaborate on the significant milestones achieved by the financial sector in 2023, particularly in relation to the implementation of policies supporting the public and businesses?

The Ministry of Finance has been proactive in conducting research, formulating proposals, and presenting them to the appropriate authorities, resulting in the implementation of numerous financial sector solutions. These solutions, amounting to a total support size of VND700 trillion (US$29 billion), encompassed a range of measures such as the extension, exemption and reduction of taxes, fees, charges and land rents. Furthermore, the Ministry advocated for the exemption and reduction of corporate income tax, personal income tax, VAT, import tax, environmental protection tax, and various other fees and charges, all aimed at bolstering businesses, individuals, and the overall economy.

We submitted to competent authorities and issued, under our authority, 60 legal documents (11 resolutions of the National Assembly and the National Assembly Standing Committee, 19 decrees of the Government, four decisions of the Prime Minister, and 26 circulars of the Ministry of Finance).

In particular, the scale of support solutions was about VND129 trillion in 2020, VND145 trillion in 2021, and VND233 trillion in 2022. In 2023, to be timely and active in implementing socioeconomic and financial and budgetary development goals, the Ministry of Finance continued to urgently research and propose to competent authorities to implement solutions on taxes, fees, charges and land rents applicable to 2023 with a total support value of about VND200 trillion.

In particular, we advocated for the Government to present a proposal to the National Assembly for a 2% reduction in VAT from July 1, 2023, to December 31, 2023, applicable to the majority of products currently subject to a 10% VAT rate. This measure was projected to result in a tax reduction of VND24 trillion (US$1 billion). To expedite the implementation of this solution and promptly provide support to those in need, the Ministry urgently recommended the Government to enact Decree 44/2023/ND-CP on June 30, 2023. This decree, which pertains to VAT reduction in accordance with Resolution 101/2023/QH15 of the National Assembly, was simultaneously put into effect.

The Ministry of Finance proposed the Government submit to the National Assembly's Standing Committee Resolution 30/2022/UBTVQH15 dated December 30, 2022 on environmental protection tax rates on gasoline, oil and lubricants, effective from January 1, 2023 to December 31, 2023. This resolution was forecast to reduce State budget revenue by VND38 trillion; and submitted to the Government to promulgate Decree 12/2023/ND-CP dated April 14, 2023 on extending the payment deadline of VAT, corporate income tax, personal income tax and land rent in 2023 for businesses, organizations, business households and individuals. Accordingly, more than VND110 trillion of taxes and land rents were considered for extension of payment time.

At the same time, the ministry asked the Government to issue Decree 36/2023/ND-CP dated June 21, 2023 on extending the payment deadline for special consumption tax arising in June, July, August and September 2023 for domestically produced and assembled cars. This solution was expected to extend the payment deadline for VND10.4 - 11.2 trillion of tax.

Under the advice of the Ministry of Finance, the Government issued Decree 41/2023/ND-CP dated June 28, 2023 on reducing registration fees for domestically produced and assembled cars. This solution was forecast to reduce state budget revenue by VND8-9 trillion. In addition to it, Circular 44/2023/TT-BTC dated June 29, 2023 was enacted to lower 36 fees and charges to support and reduce costs for businesses and people. This solution was expected to cut State budget revenue by VND700 billion.

Most recently, the ministry submitted to the Prime Minister to issue Decision 25/2023/QD-TTg dated October 3, 2023 on reducing land rents in 2023. This solution was estimated to reduce land rents by VND3.5 trillion in 2023.

Consequently, a multitude of support solutions pertaining to taxes, fees, charges and land rents have been effectively implemented, providing substantial value and extensive assistance. Despite the significant impact on State budget revenue, which necessitates the assurance of regular expenditure and capital for developmental investment, particularly for social security, the challenge of balancing the state budget remains. The implementation of the aforementioned support policies underscores the Ministry of Finance’s commitment to support businesses and individuals. The introduction and execution of these solutions have garnered the consent, support, and appreciation of the business community and the public. These measures have played an important role in aiding businesses and individuals to surmount difficulties, stabilize production and business operations, and contribute positively to socioeconomic development.

In light of the Ministry of Finance’s proactive role in advising and proposing fiscal policy solutions over the past three years, can we expect the continuation of such initiatives, specifically in terms of taxes, fees and charges, to further support individuals and companies?

In the near term, the ministry will urgently and effectively enact the 2% VAT reduction policy, as applied in 2023, for some goods and services currently subject to the 10% VAT. The National Assembly ratified the resolution at the 6th session of the 15th National Assembly. The ministry will quickly submit to the Government to promulgate a decree detailing 2% VAT reduction policy to quickly bring it into life, immediately reaching those in difficulty and in need of support. This solution was forecast to reduce the VAT tax amount by VND25 trillion. At the same time, the ministry proposed the Standing Committee of the National Assembly on continued reduction of environmental protection tax on gasoline, oil, and lubricants as applied in 2023. This resolution was estimated to result in a reduction of VND42.5 trillion in state budget revenue.

Additionally, the Ministry of Finance issued Circular 63/2023/TT-BTC dated October 16, 2023 amending and supplementing a number of articles of several circulars on fees and charges to encourage the use of online public services. The circular, which took effect from December 1, 2023, will be applied until the end of 2025. With a reduction in fees and charges by 10% to 50%, this policy will support VND100 billion for people and businesses a year.

Furthermore, the ministry will also continue to reform all aspects of work, including perfecting institutions, enhancing the performance of the apparatus and reforming administrative procedures in a more comprehensive and effective direction. It will continue to accelerate financial modernization, especially in tax and customs fields, which are considered to be highly and directly related to businesses and people in order to facilitate and reduce costs for people and businesses to improve the business environment and sharpen national competitiveness. Currently, the ministry has been actively coordinating with relevant agencies to continue reviewing export and import duties to support domestic production and business operations.

In the long term, thoroughly grasping policies and orientations stated in resolutions of the Party and the National Assembly, the Ministry of Finance will research and consult competent authorities to synchronously perfect the tax policy system consistent with good tax system standards according to international practices, provide resources for implementation of the 10-year Socioeconomic Development Strategy 2021-2030 and advance towards a better tax system to rationally mobilize resources for the State Budget and help build a favorable and fair business and investment environment and ensure economic sustainability.

What strategies does the financial sector plan to adopt in order to effectively navigate the digital transformation toward smart finance in the coming time?

In 2023, for the ninth consecutive year (2014-2022), the Ministry of Finance secured a position among the top three ministries and ministerial-level agencies in the Public Administration Reform Index (PAR Index), achieving a score of 89.76%. In terms of the public finance reform index, the ministry maintained its status as one of the leading performers, with a score exceeding 96%.

The advent of digital transformation has indeed brought about significant changes in the thinking, perception, actions, methodologies, management, direction, and administration across the majority of units within the financial sector. Recognizing that the acceleration of modernization and the development of digital finance, driven by the application of information technology and digital transformation, is a pivotal stage in the ‘Financial Development Strategy to 2030’, the Ministry of Finance has concentrated its efforts on the effective deployment of large, core information systems. These systems are closely aligned with the national digital transformation program, with a particular emphasis on assisting individuals and enterprises in managing administrative procedures such as tax, customs, and treasury.

In tax administration, 2023 continued to witness stronger digital transformation and electronic tax administration. Typically, the electronic tax declaration system has been deployed in all 63 provinces and cities and 100% of affiliated tax departments. 99.9% of registered companies use electronic tax declaration services and have submitted more than 15.6 million tax-related documents. With the application of the electronic invoice system nationwide, to date, the total number of invoices received and processed has reached nearly 6.1 billion, of which 1.7 billion invoices have codes and more than 4.4 billion invoices do not have code. Currently, tax authorities continue to deploy the business household digital map; operate a database analysis and electronic invoice management system based on big data analysis and artificial intelligence (AI); and expand the electronic invoice program from cash registers. Most recently, "VAT tax declaration service for deduction method for production and business activities" of the General Department of Taxation (Ministry of Finance) was honored by the Ministry of Information and Communications as one of four excellent online public services.

From April 21, 2023, the State Treasury officially deployed the automatic payment process for electricity, water and telecom service bills as authorized by budget-using units. This payment method has reduced administrative costs and procedures for budget-using units, helping them reduce processing time and workload for treasury officials. Up to now, this payment method is increasingly effective and gives many advantages for budget-using units. At the same time, it also shows the State Treasury's competence to provide digital services on the path towards digital treasury.

Thank you very much!

By Le Hien, Vietnam Business Forum