Tax reform approved to facilitate market economy
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Vietnamese Government has approved a 10-year tax reform for 2011-20 that seeks to encourage market economy and increase local enterprises’ competitiveness.
According to Government Decision No 732/QD-TTg issued on May 20, the tax reform strategy for the next 10 years will ensure transparency and encourage exports and investment, especially in high-technology in remote and rural areas.
The reform will encompass value-added tax (VAT), personal and corporate income taxes, special consumption taxes, import-export taxes, environmental taxes, and fees and duties on mineral and land use rights and agricultural land.
Under the plan, tax revenues are expected to increase by 70 percent by 2015 and 80 percent by 2020. By 2015, the state budget would be equal to about 24 percent of gross domestic product (GDP).
By 2015, tax administration would also be modernized to global standards to ensure over half of all enterprises will use e-tax filing.
VAT on goods and services would also be gradually reformed until a single tax rate could be applied by 2020.
A road map to reduce special consumption taxes on tobacco, beer, liquor and automobiles would make way for Vietnam’s integration in the world market.
Export taxes would encourage high value-added exports while discouraging exports of raw materials and minerals.
Import taxes and related trade barriers would be reduced to facilitate free trade.
Vietnam will cut over 3,000 tax lines this year, including 2,800 tax lines for agricultural products and 330 for IT products.
Vietnamese products might be adversely affected if local producers do not prepare well since imported products were likely to flood the domestic market to take advantage of the preferential tariffs.
Domestic producers needed to improve their product quality while building a strong local distribution network.
Corporate income taxes would also be reformed to help companies enhance their capital and production and sharpen their competitive edge.
Tax policies would aim at encouraging businesses to invest in high value-added production, support industries, bio-technology, and high-quality services.
The tax reform strategy would aim to make Vietnam one of the four Southeast Asian nations with the most favorable conditions for doing business in terms of taxation.
Under the plan, a new Law on Fees would also be drafted to replace the current ordinance, and training of tax officials would play a key part.
The Ministry of Finance would be responsible for overseeing the implementation of this strategy.
