According to the International Monetary Fund (IMF) study; taxation has an impact on foreign investment, mainly direct investment; At the same time significant impact on the allocation of financial resources. In order to attract investment capital, the competitiveness of taxes and tax policies is very important for each country and Vietnam is not out of context.
Understandably, tax competition is a comparative advantage for a country that has a comparative advantage in order to attract resources, labor and other economic factors from abroad into (or at the same time) Transfer of domestic resources abroad. There are many forms of tax competition such as tax rate cuts, tax incentives, long-term losses, simplification and shortening of tax administration.
Criteria for assessing international tax competitiveness
Currently, the World Bank uses quantitative criteria to assess the tax competitiveness of countries as follows:
- Criterion 1: Time the business performs the average state tax procedure in a year. It is time to prepare, fill out and pay tax. Preparation time includes the time needed to collect tax information to calculate the tax payable. Timeframes include time to complete forms and calculations. Tax payment time includes tax payment time online or at tax office, wait time. The less time is, the better the business and it also demonstrates simple administrative procedures, convenience.
- Criterion 2: Average number of times an enterprise has to pay tax for one year. The number of tax payments reflects the number of tax payments paid, method of payment, frequency of payment. The number of payments recorded both electronic payments. These indicator small branches are better for businesses.
- Criterion 3: Total tax rate: This is the percentage between the total tax and other obligations the enterprise has to make to the state on the total business profits.
These three criteria are ranked individually for each country in order from low to high, and then aggregated into the index of competitiveness of taxes among countries by the average. The lower the order, the higher the competitiveness of taxes and vice versa. The World Bank through its KPMG auditing firm investigates and collects data from medium-sized companies in 189 economies around the world.
Competitiveness of Vietnam's taxation
The World Bank assesses the competitiveness of taxes in countries around the world in general and in Vietnam in particular through its annual reports (PwC). Accordingly, Vietnam is considered to have dramatically changed in recent years in terms of tax competitiveness. Particularly, as Vietnam increasingly integrates into the international economy, it fulfills its tax commitments when it comes to signing free trade agreements and enhancing business environment reform. This has been highly appreciated by many international organizations and domestic and foreign business community.
However, compared with some countries in the Asia Pacific region, the criteria for assessing Vietnam's tax competitiveness are higher, especially the criteria of average tax compliance time. A company is still high compared to the requirements of enterprises. Administrative procedures related to tax and customs have been drastically reduced by the Ministry of Finance, but the requirements of enterprises should continue to simplify further. In response to this request, the Government and the Ministry of Finance have made a number of moves to further reduce and simplify administrative procedures related to taxation in the coming time to improve their competitiveness and the business environment.
In particular, with the determination to improve the business environment, continuously from 2014 to now, the Government has issued Resolutions 19 to improve the business environment in Vietnam. The World Bank's 2017 Business Suitability Annual Report shows that Vietnam ranks 82nd out of 190 economies, an increase of 9 degrees from 2016. Compared to the folding table Last year, Vietnam was promoted to 9th rank (in 2016, Vietnam ranked 91st with 61.11 / 100). The important contribution to this promotion is the dramatic reform of administrative procedures in the field of taxation as well as innovations in tax policy following the trend of integration.
Some issues need further attention
Continuously from 2014 to 2017, the Prime Minister has issued Resolutions 19 on improving the business environment, enhancing national competitiveness, which outlines the urgent orientations for improvement competitiveness of the tax. In implementing Resolution 19 of the Government, the Ministry of Finance has come up with the spirit of determination and has brought many positive results, contributing significantly to improving the business environment in Vietnam. However, prior to the integration requirements, the completion of appropriate policy tools and tax administration should continue. Accordingly, in order to improve Vietnam's tax competitiveness, improve the business environment and attract foreign capital flows, it is necessary to continue to pay attention to the following issues:
Firstly, continue implementing the reform of administrative procedures. Review and simplify tax administrative procedures; Forms, simple profile components; Specifying the responsibilities of each department and tax administration staff in receiving and handling; Amend and amend the tax regulations in line with changes in administrative procedures and reduce the frequency of tax declaration to reduce the compliance burden for taxpayers.
Second, to strengthen taxpayer support, it is necessary to further strengthen the training of new tax policy for taxpayers; Enhanced contact, dialogue, counseling via hotline or voicemail; Encourage the development of tax agents.
Third, the tax policy changes in line with common international practices such as unifying a value added tax rate; Beside the implementation of the CIT reduction schedule, special tax incentives should be formulated for start-up projects such as low tax rates and CIT exemption for the first years from the profitable year; Uniformity of a method of calculating personal income tax on income from transfer of real estate, transfer of securities ...
Fourthly, to perfect tax administration modernization, focus on building a modern and highly confidential communication infrastructure for tax collection; Soon complete the system of electronic tax services to deploy in enterprises; Collaborate and exchange information with international organizations.
