Tax reform to be sped up to encourage development
Tax reform to be sped up to encourage development
The Ministry of Finance will speed up efforts to reform policies for corporate income tax (CIT) and value-added tax (VAT), deputy minister Vu Thi Mai said at a meeting in Ha Noi yesterday.
"The Government has worked out a strategy for the next 10 years to ensure that the country has a comprehensive, equitable and efficient taxation system," Mai said.
She noted that such a system was necessary in a context where competition is increasing globally for many business components, including capital sources, technology and labour forces.
Vu Nhu Thang, director of the Institute for Finance Strategy and Policies, said these were very important taxes in the domestic taxation system that affect many aspects of socio-economic development.
"The major goal of reforming these taxes is to create advantageous conditions for investment, production and business activities, stimulate consumption, and generate stable revenues for the State budget," he said.
Tax Policy Department deputy director Nguyen Van Phung said that between now and 2020, appropriate tax policies should be created to boost production and export, increase competitiveness of domestic goods and encourage investments in regions where development remains difficult.
The policies should also lead to changes in economic structure and foster growth, while helping to stabilise living conditions, he added.
Sharing experiences about the CIT with Viet Nam, Indian international tax expert Ved Gandhi said other countries have reduced this tax in recent years to improve the business environment and lure more foreign direct investment.
He said the average CIT rate of countries in the Organisation for Economic Cooperation and Development (OECD) declined from 33 per cent in 2000 to 25 per cent last year.
In European countries, the average rate fell from 40 per cent in 1995 to 23 per cent this year. Many ASEAN nations have also been cutting this tax, with Malaysia applying a rate of 25 per cent and Singapore 17 per cent.
Tom McClelland from the European Chamber of Commerce (Eurocham) said a positive change for CIT in Viet Nam was that it had been slashed from 28 per cent to 25 per cent.
He suggested the rate should be further lowered as soon as possible as it remains higher than the level of many regional countries. CIT is regarded as an important factor in luring investment.
Meanwhile, many countries have raised the VAT and narrowed the list of products which enjoy VAT exemption in order to increase revenue, compensating for national budget deficits. The average tax in OECD, e.g., increased from 16.7 per cent in 1997 to 18 per cent in 2010.
Viet Nam should build reasonable goods portfolios which enjoy VAT exemption and other preferential treatment for the best tax efficiency, said International Monetary Fund's resident representative Sanjay Kalra. (The official VAT rate is now 10 per cent domestically.)
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