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Small and medium enterprises need own specific tax policies

Update: November, 02/2015 - 09:13
Chairwoman of the Viet Nam Tax Consultancy Association (VTCA) Nguyen Thi Cuc told Hai quan (Customs) newspaper about shortcomings of the tax regulations for small-and-medium sized enterprises.

What do you think about current tax policies for small-and-medium sized enterprises (SMEs)?

Tax reforms have offered few incentives to SMEs. For example, while the corporate income tax rate is 22 per cent, the rate of 20 per cent is for enterprises that have yearly revenue of less than VND20 billion (US$896,300) and they can submit tax declarations and pay taxes quarterly. However, tax agencies pay improper attention to examine and oversee accounting activities at SMEs. Moreover, tax agencies are not empowered to inspect and fine enterprises if they detect accounting violations.

SMEs have not attached much importance to accounting. This is evidenced by the shortage of accounting staff and chief accountants or the chief accountants fail to meet requirements by law. Accounting problems lead to the lack of financial transparency and difficulty to access funding to expand business. The problems also make the Government unable to collect the tax which should have been paid by enterprises.

The Government would be hard or unable to make right policies for SMEs because of inexact accounting reports.

Is it necessary to have tax policies, tax management mechanisms and accounting standards tailored to SMEs?

Despite the Government's efforts to simplify administrative procedures, the number of hours spent on taxation is much more than in other countries. Other countries' experience shows that specific tax policies for SMEs help Governments manage tax payment.

The policies are usually simple, easy for the Government to oversee and easy for taxpayers to follow.

I think that besides administration reforms, Viet Nam's Finance Ministry and Taxation Department should concentrate on speeding the application of information and technology and building a national database of taxpayers and tax payments to avoid tax evasion.

Currently, in Viet Nam, tax management is mostly based on invoices and paper documents, which costs time and are ineffective, risky because of illegal trade of invoices. So, it is needed to find a new management method to better detect violations.

I also think that it should have specific accounting standards for SMEs.

Do you think we should encourage SMEs to use accounting services and tax agents?

In other countries, SMEs usually use tax agents or tax accounting agents. In Korea and Japan, 96 per cent of their SMEs use tax agents' services. Meanwhile, Vietnamese SMEs are not interested in tax agents as the agents don't offer tax accounting service because there is no legal basis.

Those who are recognised to work as tax agents should be allowed to do accounting and related work. — VNS

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