Vietnamese businesses burdened with taxes, FIEs at ease with tax exemptions

Studies have found that Vietnam’s taxation system offers many incentives to foreign invested enterprises (FIEs), but puts an increasingly heavy burden on Vietnamese enterprises and people.

The 2020 annual economic report released by VEPR (the Vietnam Institute for Economic and Policy Research) on June 17 drew the public’s attention to the tax collection system.

Vietnamese businesses burdened with taxes, FIEs at ease with tax exemptions

The proportion of fees and charges to the total state budget collection and tax revenue has increased in recent years.

“Vietnam’s budget collection very much depends on indirect taxes, especially VAT. Fees and charges are burdening people. The proposals on raising taxes on consumer goods, fees and charges need thorough consideration,” the report reads.

Studies have found that Vietnam’s taxation system offers many incentives to foreign invested enterprises (FIEs), but puts an increasingly heavy burden on Vietnamese enterprises and people.

Pham The Anh, chief economist of VEPR, said one of the factors that most affect tax revenue in Vietnam is tax incentives, especially corporate income tax (CIT).

Many foreign companies investing in Vietnam can enjoy a preferential tax rate of 10 percent, just half of the normal tax rate. And many of them have been exploiting the policy to evade tax.

 

Vietnam offers too many tax incentives to FIEs, while the benefits Vietnam received from enterprises is modest.

“Some figures such as the loss of revenue because of tax incentives have not been fully calculated and made public. The analyses about the benefits and costs of tax incentives have also not been listed in detail, ” Anh commented.

Pham Chi Lan, a respected economist, believes that when integrating more deeply into the global economy, Vietnam will have more sources of tax collection. Taxation agencies need to design taxes reasonably and organize tax collection.

“What concerns me the most is the execution in tax collection. We adjust taxes, but the tax collection system has not improved. As a result, tax evasion is common in the foreign invested economic sector which should have made a great contribution to the economy,” Lan said.

“This shows Vietnam's inadequacy in tax administration and tax collection,” she said.

She also mentioned so-called ‘tax corruption’, pointing out that taxpayers and tax officers collude to appropriate big amounts of money which should have been paid to the state budget.

Together with tax evasion and tax avoidance, tax incentives offered by the government to certain groups of taxpayers are outside the standard tax system. With the incentives, taxpayers pay lower tax than the standard tax. 

Kim Chi

Foreign-invested enterprises hopeful about plans to list shares on bourse

Foreign-invested enterprises hopeful about plans to list shares on bourse

The Ministry of Finance (MOF), suggesting solutions to help the stock market overcome the Covid-19 crisis, has once again proposed allowing foreign-invested enterprises (FIEs) to list on the bourse. 

FIEs reluctant to list shares on bourse

FIEs reluctant to list shares on bourse

Only 10 foreign invested enterprises (FIEs) have entered the bourse over the last decade, a very modest figure compared with the tens of thousands of enterprises now operational in Vietnam.

 
 

Other News

.
Vietnam calls for initiatives to ensure efficient functioning of APEC supply chains
Vietnam calls for initiatives to ensure efficient functioning of APEC supply chains
VIETNAM & WORLDicon  07/06/2021 

Asia-Pacific Economic Cooperation (APEC) economies needs to continue promoting free and open trade and investment, undertake initiatives to ensure regional supply chains to function smoothly and efficiently,

Drawing up plans to buttress recovery
Drawing up plans to buttress recovery
BUSINESSicon  07/06/2021 

The ongoing fight against the COVID-19 pandemic has led to huge demands for capital for Vietnam to support local production. 

VN game industry can become big exporter: experts
VN game industry can become big exporter: experts
BUSINESSicon  07/06/2021 

Vietnam’s mobile game market has huge potential and games can become one of the country’s major exports, experts have said.

Ministry denies proposing price stabilisation fund for steel
Ministry denies proposing price stabilisation fund for steel
BUSINESSicon  07/06/2021 

The Ministry of Industry and Trade (MoIT) has denied rumours that it proposed the establishment of a State stabilisation fund to cope with the sudden increase in steel prices that has impacted many businesses.

VN auto manufacturers hit hard for last two years
VN auto manufacturers hit hard for last two years
FEATUREicon  07/06/2021 

The Vietnamese auto market prospered for a few years before being affected by the Covid-19 pandemic, but sales of locally assembled cars have fallen.

Supermarkets report dramatic increase in online orders these days
Supermarkets report dramatic increase in online orders these days
BUSINESSicon  06/06/2021 

Some supermarkets and fast food stores in districts 12, Tan Binh, Hoc Mon yesterday announced a dramatic increase in online orders, up by 3-5 times compared to prior days.

New COVID-19 outbreak puts a halt to more domestic flights
New COVID-19 outbreak puts a halt to more domestic flights
BUSINESSicon  05/06/2021 

Given COVID-19 developments, the Ministry of Transport (MoT) has approved the suspension of passenger flights to Con Dao Island and those linking Quang Ninh and Gia Lai provinces with Ho Chi Minh City.

Made-in-Vietnam wooden products conquer US market
Made-in-Vietnam wooden products conquer US market
BUSINESSicon  05/06/2021 

Boasting huge production advantages and capitalising on good market opportunities, Vietnam’s furniture sector has stood firm amid COVID-19 and improved its position in the global market and especially in the US.

Hanoi wants to tax abandoned villas
Hanoi wants to tax abandoned villas
BUSINESSicon  04/06/2021 

Hanoi has proposed to the Ministry of Finance the imposition of a tax or fine on owners of half-finished and abandoned townhouses and villas which were causing considerable waste of land resources.

VN may have to reduce renewable power in the next five years: energy institute
VN may have to reduce renewable power in the next five years: energy institute
BUSINESSicon  04/06/2021 

It is likely that Vietnam will have to reduce renewable energy sources in the next five years, as booming development in recent years was weighing on the power system, according to a recent report by the Institute of Energy.

Vietnam Airlines to sell 11 aircraft
Vietnam Airlines to sell 11 aircraft
BUSINESSicon  04/06/2021 

The national flag carrier Vietnam Airlines has announced the plan to sell 11 A321ceo aircraft made in 2004, 2007 and 2008.

VIETNAM BUSINESS NEWS JUNE 5
VIETNAM BUSINESS NEWS JUNE 5
BUSINESSicon  05/06/2021 

Demand for deposits soar as cashless payments become more popular

Covid-19 pandemic helps clean up condotel market in Vietnam
Covid-19 pandemic helps clean up condotel market in Vietnam
BUSINESSicon  04/06/2021 

Severe economic impacts as a result of the pandemic have put more stress on the local condotel market.

IPs set up, but Vietnam still needs to do more to attract investors
IPs set up, but Vietnam still needs to do more to attract investors
BUSINESSicon  03/06/2021 

There were positive developments of industrial parks in Vietnam in the first five months of the year, but experts still say the country should do more to attract big investors.

CPI growth in Jan-May lowest in five years
CPI growth in Jan-May lowest in five years
BUSINESSicon  03/06/2021 

The country’s consumer price index (CPI) in the first five months of the year grew 1.29% year-on-year, the lowest for the period since 2016, according to the General Statistics Office.

New policies needed to boost Vietnamese private sector
New policies needed to boost Vietnamese private sector
FEATUREicon  06/06/2021 

While foreign-invested enterprises (FIEs) have been growing and prospering, Vietnamese enterprises have been developing inadequately because they lack favorable conditions to thrive.

Deposit interest rates rising despite pandemic
Deposit interest rates rising despite pandemic
FEATUREicon  05/06/2021 

After many months of staying at low levels, deposit interest rates at banks have increased since late May.

Ministry of Finance proposes keeping fee reductions until end of 2021
Ministry of Finance proposes keeping fee reductions until end of 2021
BUSINESSicon  03/06/2021 

The Ministry of Finance has proposed extending the reduction periods of several fees beyond the current expiration date of June 30.

Nearly 60,000 businesses withdraw from market
Nearly 60,000 businesses withdraw from market
BUSINESSicon  03/06/2021 

The number of newly established enterprises is still increasing, but the rate of businesses withdrawing from the market has also risen.

LG pulls out of smartphone production in Vietnam from today
LG pulls out of smartphone production in Vietnam from today
BUSINESSicon  02/06/2021 

Today, June 1, is the last day that South Korean conglomerate LG produces smartphones in Vietnam before it focuses on making home appliances only.

 
 
 
Leave your comment on an article

OR QUICK LOGIN