VietNamNet Bridge – The 2012 report about the national economy
just released by the National Assembly’s Economics Committee, has pointed out
that Vietnamese people have been burdened with taxes and fees, and that a lot
of the policies pursued by Vietnam do not follow the common tendency in the
world.
High taxes annul development
The report has pointed out that
Vietnamese businesses now have to bear high tax rates, because of which they
cannot accumulate strength for re-investment. This is also considered one of
the most important reasons which prompt enterprises to make the transfer
pricing.
Regarding the personal income
tax, while Vietnamese people’s taxable income is lower than Chinese and
Thailand, but they have to bear the tax rates higher than Chinese and Thailand.
With the income of 3451-5175
dollars a year, Vietnamese people would be imposed 10 percent in personal
income tax. Meanwhile, in Thailand, the 10 percent tax rate is only imposed on
those with the annual income of 4931-16,434 dollars. The figures are 3801-9500
dollars in China.
At present, the 25 percent
corporate income tax is being applied to the majority of businesses in Vietnam,
much higher than that of other countries which impose 2-30 percent.
Vietnam also imposes other high
taxes as well, including the special consumption tax (luxury tax) and import
tax. Especially, they also have to pay under-the-table expenses to obtain
contracts. Citing a recent survey, the report has said that 56 percent of
enterprises which joined the bids for the projects funded by the state budget
said they have to “pay commissions” to obtain what they want.
Economists have also agreed that
the ratio of tax collection on GDP in Vietnam is now overly high, which makes
it unable for businesses to accumulate money for re-investment.
The high taxes also prompt
businesses to commit tax frauds, including the so called “transfer pricing”
which has been found at many foreign invested enterprises. The foreign direct
investment sector makes up 20 percent of GDP, but it accounts for 10 percent of
the total tax collection of the state budget.
The economists believe that since
the corporate income tax rate in Vietnam is higher than that in regional
countries and the world, FIEs have been trying to conduct the transfer pricing,
declaring wrong income in Vietnam to be able to pay lower tax.
A report by the Ministry of
Finance showed that in 2007-2011, the gross of collection to the state budget
from different sources accounted for 29 percent of GDP. However, if counting on
the income from taxes and fees, the figure would be higher, at 26.3 percent of
GDP.
Pham The Anh from the Hanoi
Economics University, a member of the team making the report, said Vietnam’s
collection from taxes and fees, not including crude oil, is very high if
compared with other countries in the region.
In recent years, China has the
ratio of collection from taxes and fees on GDP at 17.3 percent on average. The
figures are 15.5 percent for Thailand and Malaysia, 13 percent for the
Philippines, 12.1 percent for Indonesia, and only 7.8 percent for India.
In conclusion, with the
protection policies, overlapping taxation and the “two-digit inflation tax,”
every Vietnamese person now bears the ratio of tax on GDP higher by 1.4-3 times
than in other regional countries.
The economists have also pointed
out that there are three main sources of income for the state budget, including
the VAT tax collection, corporate income tax, import-export tax and luxury tax
on imports. The problem here is that the proportion of the income from
corporate income tax in the total income--has decreased gradually from 36
percent in 2006-2008 to 28 percent in 2009-2011.
Once Vietnam relies on the
import-export, it would suffer the budget deficit in the near future, when
Vietnam, under the WTO commitments, would have to cut import tariffs
DNSG
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