More value added and corporate income tax support is needed to help
under fire companies.
According to Vietnam's Tax Reform
Strategy 2011-2020, one of the remarkable points is that the country planned to
reduce the general tariff under the roadmap with corporate income tax (CIT) of
less than 25 per cent to attract investment, facilitating enterprises to have
more financial resources, increasing accumulative investment to promote
development, improving competitiveness.
Regarding value added income tax
(VAT), the strategy was aimed at applying basically a tax rate by 2020, not
including zero per cent tax rate applied to export of goods and services.
Economic expert Pham Chi Lan said
that it was reasonable that government should reduce CIT from current rate of
25 to 20 per cent.
"The high tax rate will make
enterprises not have courage to make profit as well as not have capital to
reinvest, so, they will have to borrow from banks. Thus, the state will suffer
a loss for not collecting much from CIT," said Lan.
Tom McClelland, chairman of the
Eurocham Taxation Committee, raised his voice to support the principles of the
government's Roadmap for Strategic Tax Reform for period 2011-2020. However,
the committee would support a reduction in the CIT rate to 20 per cent and for
this to be implemented as soon as possible, instead of waiting up to10 years as
the proposal, he said.
"One of the biggest positive
changes in 2009 CIT Law was the reduction in the CIT rate from 28 to 25 per
cent, which made Vietnam more competitive. Since that time however other
countries in the region have been reducing their tax rates further," he
said.
As one example, in order to
improve Thailand's competitiveness prior to the implementation of the ASEAN
Economic Community in January 2015 Thailand reduced its CIT rate to 23 per cent
in 2012 and will reduce it further to 20 per cent starting January 1, 2013.
Meanwhile, there are still many
entanglements on VAT which raised many worries for foreign investors.
International Monetary Fund (IMF)
representative Sanjay Kalra said currently there were 25 groups of goods and
services included non-taxable items.
International experience showed
that such too many items would cause some problems on management and compliance
for taxpayers, he said.
Nguyen Thi Cuc, chairwoman of the
Vietnam Tax Consultant Association (VTCA) agreed and added that the application
of 5 and 10 per cent caused unfairness.
"Therefore, it is necessary
to reduce number of nontaxable items groups and lessen groups subject to five
per cent tax rate; likely to apply one tax rate, excluding the zero rate for
exports," said Cuc.
In addition, under VAT regulation
since March 1, 2012 VAT was imposed on interest received enterprises not being
credit institutions.
According to McClelland, no other
country imposed VAT on interest. The imposition of VAT is a discouragement for
foreign lenders and for Vietnamese companies obtaining funding from offshore,
therefore, that application of VAT to interest should be removed as soon as
possible, he said.
Nguyen Trang | vir.com.vn
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programmes. Many thanks for visiting www.yourvietnamexpert.com and/or contacting us at contact@yourvietnamexpert.com
No comments:
Post a Comment