Amendments on the tax laws: Change of policies accompanying administrative reform

Reform of the tax administration will create an environment of fair competition, transparency, and reduce costs and time for taxpayers.

Public’s consensus

Currently the Ministry of Finance is proposing to amend the 6 tax laws, including: Value Added Tax, Special Consumption Tax, Corporate Income Tax, Personal Income Tax, Natural Resource Tax, Export Tax and Import Tax. At the same time, they proposed to develop and issue a Property tax. The proposed amendment and promulgation of these tax laws aims to restructure the state budget in the direction of ensuring a secure and sustainable national financial system, contributing to macroeconomic stability under the Resolution No. 07-NQ/TW dated on 18/11/2016 issued by the Politburo.

Regarding the change of tax policy in the coming time, current public opinion is agreeing and welcoming the direction and some of the policy objectives that the Ministry of Finance has informed. These are the adjustments to reduce the number of groups of goods and services not subject to Value Added Tax; to reduce the group of goods and services subject to the tax rate of 5%. Particularly, the public praised the reduction of corporate income tax for small enterprises (with the tax rate of 17%) and micro enterprises (with the tax rate of 15%); to continue the tax incentives for investment in industries that produce value added products, supporting industries... In addition, many opinions also support the expansion of the personal income tax base and the determination of taxable income; amendment and supplement to the tax calculation method for each income item in a simplified manner and in conformity with the international practices.

According to the economic expert – Mr. Ngo Tri Long, the improvement of the revenue policy in conjunction with the restructuring of state budget revenues in the direction of covering all sources of income, expanding the basis of revenue, especially the new revenue sources is perfectly in line with the international practice. However, Mr. Ngo Tri Long also said that taxation is a very sensitive area for production, socio-economic life. It has a great impact on the competitiveness of the economy, businesses and impact on macroeconomic stability (growth, inflation, employment...). Therefore, it is necessary to be careful and have specific steps and routes.

"Every time a change is made to taxes that have a large impact on everyone; every adjustment, revision or choice of policy has two sides. No choice is absolute, only advantages without limitations. When the choice is selected, advantages and disadvantages should be stated clearly with concrete evidences,” said Mr. Ngo Tri Long.

Need specific explanation

At the public request, as a tax expert, Mr. Nguyen Van Phung, Head of Corporate Tax Management Department, General Department of Taxation admitted that the amendment on tax laws is a big pressure for The Ministry of Finance because it requires not only to ensure fiscal incentives but also to ensure a stable business environment. This is the hardest problem.

Commenting on the Ministry of Finance, Mr. Ngo Tri Long said that in order to get persuasion, when an increase in the tax rate is conducted, more detailed explanations are required for the impact of the proposed adjustment on investment, production activities, accumulation and consumption of businesses and people.

"Assessing the impacts of some taxes that have adjustments and supplements in their draft, the cost of benefits of the solutions has not been clarified. Especially, it is necessary to forecast the expected increase or decrease of the revenue when implementing the tax policy. For new policies that have additions, incremental or decremental adjustments, it is necessary to supplement the impact assessment on the subject of policy adjustment and the impact of policy on the economy in general. The policy impact assessments also need to be studied to provide additional basis for proposing amendments to tax laws that are more convincing. To illustrate the data given in the draft, an appendix should be provided which specifies the method of calculating the numbers," Mr. Ngo Tri Long commented.

According to many experts, in the process of amending and supplementing taxes, it is necessary to continue reforming the tax administrative procedures. Although this has achieved remarkable results over the past years, there are still limitations, which require the tax system to make further efforts in implementing the Tax System Reform Strategy in the coming period, to continuously create favorable business environment for enterprises. The reform of the tax administration will create an environment of fair competition, transparency and reduce costs and time for taxpayers. This contributes to improving the efficiency of enterprises, reducing tax losses, attracting foreign investment and creating stable and sustainable income.

In the context of the state budget, it is facing many difficulties, in addition to amending the tax law to restructure the revenue, it is necessary to provide solutions to control expenditure, tax savings, and restriction of tax debt, to reduce losses to the state budget... So, the reform of the new tax law can be completed and get the consent of the public.