In Vietnam’s history, whenever the economy develops, it is associated with the development of private businesses, and vice versa. Lawyer Truong Thanh Duc from Basico Law Firm writes for “For a Powerful Vietnam” Forum:
A businessman from Australia complained to me about personal income tax payment procedures. When he declared tax for the first time in Australia, he only needed to read the instructions and then fulfill the declaration immediately. But he could not do it here although he has been living here for years.
As a consultancy lawyer, I usually see similar cases.
I work with laws and I read legal documents every day. I give advice to businesses and I get involved in the compilation of laws. However, I sometimes still find it difficult to interpret legal regulations.
For tax payment alone, Decree 129/2013 stipulates 50 behaviors subject to administration fines. In accounting, 90 behaviors are subject to fines under Decree 105/2013. A signature in the wrong position will be fined. In addition, there are risks of criminal offenses if one ore more violations related to invoices and vouchers are committed.
I read in the newspapers some days ago that nearly 100 percent of businesses inspected in tax payment were found violating rules on tax declarations and payments.
Businesses really don’t intend to make violations, because they would rather spend time on doing business. However, since regulations are too intricate, businesses still makr violations.
The Department of Construction Economics under the Ministry of Construction has found 20,000 construction norms which are outdated. The norms, which were built based on technologies present 30-40 years ago, still have not changed.
Taxation agencies accept the unit price of VND16,000 per square meter for ?screed?, but in fact, enterprises have to pay VND50,000. As a result, they have to ‘fabricate’ other expense items to legalize the costs.
The 2015 Penal Code mentions 59 crimes subject to full or partial asset confiscation, an increase of 41 crimes compared with the 1999 Penal Code. Of these, asset seizure is applied to 16 out of 46 offenses for infringing upon economic management order.
As such, the assets of someone will be confiscated if he defrauds others of VND2 million and more, or if he is found abusing credit to appropriate assets worth VND50 million and more.
Such provisions are worrying. In principle, one only has to compensate for the losses he causes, and there is no reason to seize the assets which do not have relations to the crimes.
I asked many businesspeople if they know in which legal document the famous regulation ‘people and businesses can do all the things that are not prohibited by the laws, while the State can only do the things that the laws allow’ can be found.
They all affirmed the regulation is stipulated somewhere. But in fact, no legal document stipulates this.
The Constitution and the Civil Code (Article 2.2) stipulate civil rights, including the right to trade, and the right to do business, but they don’t mention the issues in details.
In the case of Grab, if the business model is not mentioned in the current laws, the enterprise must have the right to do its new type of business. But this is not seen in reality.
Vietnam now has over 500,000 businesses, a very modest figure if compared with the total population of 93 million.
In recent years, the number of newly registered businesses has been always higher than 100,000 each year. This shows the business sprit and the aspiration of getting rich of the Vietnamese people.
Therefore, I believe that Vietnam needs to remove the barriers that hinder the development of private businesses. Once the State, the institutional system and the laws become friendly, people will feel secure to make investment and do business. If so, the 10 percent GDP growth rate is within reach.