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Viet Nam: Tax System Still Headache for Business
Source: english.vietnamnet.vn
Source Date: Friday, June 18, 2010
Focus: Institution and HR Management
Country: Viet Nam
Created: Jun 21, 2010

Lack of consistency in taxation and customs policies and procedures still causes headaches for enterprises despite the introduction of reforms.

In fact, this was the major tax concern of enterprises in talks between 600 northern Vietnamese enterprises and Ministry of Finance representatives in Ha Noi last Thursday. In 2006-07, a year before the reforms were officially introduced, the tax policy for trucks of between 25 tonnes and 45 tonnes varied at different border gates for the tax year 2006-07, according to Nguyen Canh Tuan, director of Hoang Tra Limited Co, a truck importer.

In particular, the tax rate at Quang Ninh border gate was 10 per cent while at the Lang Son gate for the same kinds of truck, it was 20 per cent. After receiving complaints from enterprises, the ministry adjusted the tax rate to 10 per cent in March 2008. Consequently, a number of enterprises, which had paid tax at higher rate, were eligible for reimbursement. However, up until now, many companies still have not received refunds, including the Hoang Tra Co. “Our estimated loss of VND20 billion (US$1 million) hasn’t been refunded,” Tuan said.

In response, the Deputy Minister of Finance, Do Hoang Anh Tuan, said the tax refund process was complicated when batches of trucks imported before 2006 were included. “When calculating the value of the tax refund, many factors have to be taken into consideration. There hasn’t been a final calculation yet.” In regards to the value added tax (VAT), representatives from Thanh Hoa Commerce and Mountainous Development Investment Co said the VAT policy for companies buying agricultural produces directly from farmers was not practical as it didn’t encourage purchases in remote areas.

Representatives from Tien Giang Food Co suggested the ministry review a provision requiring enterprises to use bank slips for transactions worth more than VND20 million ($1,000). This should be increased to VND150-200 million ($7,500-10,000) for agricultural products. “The nature of the business is that purchase activities happen at weekends when banks are closed, so the provision hinders our transactions to a great extent.” The ministry said solving the problem was beyond its jurisdiction. Deputy Minister Tuan admitted there was a gap between policies and practice. However, this was partly due to a lack of input from enterprises during the establishment of new policies.

He said that although the ministry had opened several online forums for regular discussions between the ministry and enterprises, each month an average of only two messages was posted. Tuan said in the first phase of implementing the Government’s administrative reform proposal at the Ministry of Finance, the ministry wanted to simplify 100 per cent of tax procedures and 95 per cent of custom procedures. He emphasised tax and customs reforms still topped the working agenda of the ministry this year.
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