The Ministry of Finance is expected to cut the tax payment time for businesses to 354 hours by the end of this year, down nearly 60% from the current 872 hours.
The move aimed to achieve the target of reducing the tax payment time to the regional level of 171 hours set for mid-2015 by the Prime Minister.
To pull off this target, the Ministry was focusing on revising current regulations on tax declaration and payment, Deputy Minister of Finance Do Hoang Anh Tuan told a seminar on improvement of Vietnam’s business environment indicators in Hanoi late July, saying the Ministry was drafting a circular and a decree aiming to reform tax formalities.
At present, the Ministry was gathering opinions from ministries, localities, professional associations and the World Bank before finalizing its circular which sought to streamline procedures for declaration and payment of personal income tax, enterprise income tax and value-added tax, Tuan said.
Once introduced, this circular would help cut the tax payment time by 201.5 hours, he said, acknowledging that it currently costs businesses so much time for filling in tax declaration forms, even electronically.
Meanwhile, the draft decree, which was now ready for submission to the Government, was expected to ease tax declaration and payment frequencies. Under this decree, businesses could pay taxes without having to make declaration and could make tax finalization only once, Tuan said, adding around 96% businesses would shift to pay taxes quarterly, given businesses entitled to quarterly tax payment now expanded to those annually earning under VND 50 billion from under VND 20 billion currently. Once this decree was issued, the time for clearing tax formalities would be further cut by 88 hours, Tuan said.
The Ministry of Finance was also assigned by the Government to propose to the National Assembly at its upcoming sitting in October other solutions to further reduce the tax payment time, Tuan said, but admitting achieving the target of 171 hours by next year was challenging.
The Ministry of Finance also urged the customs sector to shorten the current customs clearance time of 16.5 days, Tuan told the Tuoi Tre (Youth) daily, saying the Ministry had asked the customs sector to clear within 10 minutes goods on green channel (those not subject to dossier examination and physical inspection), which accounted for 58% of imports and exports; two hours for quality inspection and quarantine formalities; and eight hours for physical inspection of goods, which would be now conducted only when screeners detected suspicious signs.
Nguyen Thi Cuc, chairwoman of the Tax Consultancy Association, told the Tuoi Tre that consultations with businesses must be held on the revision of tax- and customs-related administrative procedures to ensure that policies and regulations truly meet their expectations.
Nguyen Giang Tien from the Vietnam Aviation Association also stressed that simplifying administrative procedures needed close coordination among concerned authorities, saying in order to have a customs declaration cleared within five minutes, it might require around 500 other accompanying papers to be produced to different authorities.
Analysts agreed that only when the tax sector considered improvement of its personnel key to administrative reform and corruption control could it ease tax formalities for businesses as expected by the Prime Minister.
At his meeting with tax agencies earlier July, the Prime Minister stressed the importance for the sector to improve its personnel quality and drastically fight corruption and negative practices in order to reform the tax collection process.
But fighting corruption seemed not a top priority for the tax sector, analysts pointed out, citing the General Department of Taxation’s first-six-year report which listed the settlement of proposals and complaints of businesses and corruption control as its last task.
To modernize the tax system and effectively tackle corruption, the tax sector should increasingly apply automatic tax declaration and payment in replacement of tax collectors, analysts said, citing the huge number of tax officers which even showed signs of further increase.
E-tax payment currently applied only on a trial basis in Hanoi, Vinh Phuc and Bac Ninh northern provinces with over 200 participating businesses which mostly stayed at e-tax declaration only. So far, just VND 115 billion (over USD 5.4 million) had been collected electronically and an accumulated amount of over VND 90 trillion in taxes had been paid through commercial banks by the end of June.
According to the Saigon Times weekly, Vietnamese businesses annually spend as much as 872 hours on tax payment, 4 times the average of the Asia-Pacific region. This includes 335 hours for social insurance payment, 320 hours for value-added tax payment and 217 hours for business income tax payment. Particularly, taxpayers are required to make detailed monthly and annual declarations both in paper and electronically, making complicated tax payment formalities even more complex.-