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‘People' factor key for tax reform

Update: July, 15/2014 - 09:32

Vu Xuan Tien, policy analyst with the Viet Nam Association of Corporate Directors, tells the Tuoi Tre (Youth) newspaper that unclear tax policies are allowing petty corruption to flourish

As you already once mentioned, any business or businessperson would know that petty corruption is quite prevalent among tax officers. Why do you think this is the case?

Finance Minister Dinh Tien Dung recently has also affirmed that petty corruption is quite common among tax collectors. That kind of corruption can be done under a form of unofficial agreement between businesses and tax collectors.

Tax officers can actually negotiate a deal with business owners. This means that part of the planned tax collection is indicated on official papers and added to the State budget. Another part is paid in cash, obviously without being indicated on papers or receipts, to tax officers. The rest is returned to the business as a form of tax evasion.

It's the same when inspections are carried out to calculate Value Added Tax refunds. Tax inspectors can negotiate with business owners to get 5-10 per cent of the total VAT refund as the inspectors' "personal allowance".

If business owners agree to co-operate, the procedure can be carried out in a quick and smooth manner. Obviously no business owner wants to denounce tax officers because it's so hard to get evidence. That's why only a few tax corruption cases are brought to light.

Do you think this is because many tax policies are not clear, giving tax officers room to complicate things?

This is true. Most of the laws and ordinances in Viet Nam are very general. Therefore, we have to rely on decrees to explain the implementation of tax policies.

However, many decrees only provide general guidelines to follow and the nitty-gritty part like requirement and procedure can be found in the attached circulars.

Some circulars have even made-up requirements and create more red-tape. For example, the amended Law on Value-Added Tax, which became effective in January, stipulates that businesses can apply for the tax deduction method on a voluntary basis.

Circular 219 issued in 2013 by the Finance Ministry however stipulates that businesses must meet certain requirements to apply for VAT deductions method, which can lead to confusion and abuse of the law.

Firms in Viet Nam spend an average of 872 hours a year filling, preparing and paying taxes. How can we reduce this number?

That number used to be 1050 hours in the 2006-07 period. That means we have made some progresses but it's still four-five times higher than regional countries.

To reduce that, the tax sector must have a complete overhaul to wipe out unnecessary and redundant regulation and requirement, which can make it easier for businesses and spur production.

The tax sector must calculate the number of steps that can be reduced in tax procedure. This can ease the burden on businesses and people in general. Especially, we need to apply technology in this field, such as filing tax online, paying tax through bank account.

This will mean less direct contact between tax officers and businesses. Obviously, the biggest obstacle is the people. All of the good regulation and policy will mean nothing if we don't have tax officers who are fair and consider their task as serving the people.

It's really time for tax officers to reform their working style, behaviors when they are in contact with tax payers. For me, the "people" factor is also extremely important. — VNS

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