VietNamNet Bridge – Deputy Director of the Department of Business Environment and Competitiveness of the Central Institute for Economic Management, Nguyen Minh Thao, spoke to the Hai Quan (Customs) newspaper about Viet Nam’s tax and insurance reforms.

How do you assess the recent reforms in tax and social insurance?

Nguyen Minh Thao

The Ministry of Finance has initiated many reforms on tax policies and administrative procedures, which were highly welcomed and praised by business. The tax reforms covered many areas, such as simplifying administrative procedures and increasing tax payer services.

Together with the tax reform, Viet Nam’s Social Insurance has also proposed many ideas to shorten administrative procedures for social benefits, such as compensation for sick leave, maternity leave and retirement, in order to ensure workers’ rights and interests. The Social Insurance has reviewed all administrative procedures in order to simplify and cut through red tape.

The General Department of Taxation, together with Viet Nam Social Insurance, have taken measures on policies and speeding up the application of information technology in management. The General Department of Taxation has sped up the implementation of online tax registration to 98.95 per cent of businesses, and enabled online tax payment to more than 90 per cent.

Thanks to these reforms, Viet Nam has cut the time it takes to file and pay annual taxes and social insurance by 102 hours, according to the World Bank.

However, in order to reach the level of countries such as Thailand, Singapore and Indonesia, the tax and social insurance agencies need to do more to actively support production and trade enterprises.

The Government expected the tax and social insurance sectors could reach the average level of the ASEAN4 countries (Singapore, Malaysia, Thailand and Philippines) by the end of 2016. Do you think it is feasible?   

According to the Finance Ministry’s calculation on the basis of changes in regulations, policies and IT applications, the tax payment time is scheduled to drop to 119 hours per year to reach the average level of the ASEAN-4. Similarly, according to the Social Insurance calculation, on the basis of simplifying administrative procedures for applications through the postal services and IT, payment time is expected to reach the average level of ASEAN-4 at 49 hours per year.

According to a report by the General Department of Taxation, the tax procedures are still too long and complicated. This sector still needs to cut down time in the implementation of many procedures. The majority of important tax management procedures were not amended and implemented.

For the social insurance sector, implementation of administrative procedures is related to many other ministries, such as the Health and Labour, Invalids and Social Affairs, lengthening the time to review and deal with files. It also causes difficulties in the application of online registration and payments.

However, I think it is feasible to cut down the time on tax registration and payment to 119 hours per year and social insurance payment to 49 hours per year if those reforms by the finance ministry and the Viet Nam Social Insurance are resolutely and fully implemented.

What are the most effective measures that the tax and social insurance sectors need to implement in order to reach these targets?

What the two sectors need to do to boost administrative reform is to make use of the information technology. The application of information technology in carrying out tax and social insurance procedures has helped to cut down time and limit direct contact between businesses and tax and social insurance officials, thus creating more favourable conditions for businesses and improving the business environment.

IT application will also help the two sectors to make tax and social insurance management methods more modern and comprehensive.

Although the Government has strived to reach these targets, many other countries have also tried to improve their tax and social insurance policies. What should Viet Nam do to keep up with them?

 In order to improve their business environment, ASEAN countries operate in line with international norms. For example, they use the World Bank’s Doing Business report to carry out reforms in policies and administrative procedures.

Viet Nam, too, has adopted this approach to reform tax and social insurance policies and administrative procedures. We can keep up with other countries if we fully and resolutely implement this way.   

However, there remain gaps between policies and regulations and their implementation. Therefore, it is necessary to focus on closely supervising implementation of related policies and regulations and attitudes of the relevant officials tasked with this mission. 

VNS