The research purpose of the thesis The purpose of the thesis is to answer the following research questions : Rationale for income taxes and income tax amendments as WTO member; Situatio
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INTRODUCTION
1 Urgency of the research
Adjustment of income tax is one of the important requirements of
adjusting tax policy system Although having some initial achievements, the
process of adjusting income tax in accordance with its commitment of joining
the World Trade Organization (WTO) of Vietnam still needs further
adjustments
Therefore, Vietnam’s adjustment of its income tax as a WTO members
are topically and urgent matter
2 Overview of topic-related research
While tax reform is at its first step, there has been a large number of
articles about Vietnam 's tax policies However, those articles almost focused
on clearly explaintation of tax as a tools should be used to adjust income tax or
focusing on analysis and proposing solutions to improve tax policy generally
and therefore lacking of deep analysis and proposals to adjust income tax when
Vietnam is WTO member
3 The research purpose of the thesis
The purpose of the thesis is to answer the following research questions :
Rationale for income taxes and income tax amendments as WTO member;
Situation analysis of income tax amendments in Vietnam as a WTO member;
solutions to further adjustments of income tax until 2020
4 Subjects and scope of the thesis
Research’s subjects of the thesis are income tax and income tax
amendments when Vietnam is a member of the WTO
Scope of thesis: the thesis focused on research of 04 basic adjustments of
income tax in the context of WTO member: determining taxable income;
determining deductions or deductible expenses for income tax calculation
purposes; the income tax rate and income tax incentives
Study period : from 1991 to the present and focuses on the period from
2007 to date after Vietnam became a WTO member Proposed adjustment
solutions for income tax until 2020
2
5 Research Methodology
The thesis used following methods: statistical, aggregate, classify, sort, compare, compare, analyze , evaluating methods to draw comment for researching thesis In addition, the thesis also used econometric methods, models, graphs to assess both the quality and the quantity of research results
6 New contributions of the thesis
The new contributions include: Systemarization of a theoretical basis for adjusting income tax; assessment of the situation and the issues that need further adjustment; proposing solutions to adjust income tax
7 Structure of thesis
In addition to the cover , table of contents , list of tables , acronyms and graphs , the introduction and conclusion , list of published works relating to the thesis , the list of documents references and appendices, the thesis includees 03 chapters with 06 tables and 13 figures
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CHAPTER 1: GENERAL THEORY OF INCOME TAX AND
INCOME TAX AMENDMENT IN THE CONTEXT OF VIETNAM
JOINING WORLD TRADE ORGANIZATION ( WTO ) MEMBER
1.1 Income tax and income tax amendments
1.1.1 An overview of income tax and income tax amendments
Income tax is a direct tax levied on real income of the individual or entity
Income tax plays a very important role in ensuring revenues for the State budget
and in implementation of management, macro-regulation functions of the State
in terms of economic and social activities in the whole national economy
The principles of levying income tax : Taxing on the basis of taxable
income; progressive taxation ; selectingg time to determine taxable income
Income tax is classified as corporate income tax (CIT) and personal income tax
(PIT)
1.1.2 Contents of income tax amendments
The concept of income tax amendments: Income tax amendments are
amendments, supplements and completation of the income tax regarding both
income tax policy and income tax administration in order to achieve income tax
management’s objectives
Contents of income tax amendments : Adjustments of income tax policies
have a number of different contents; however in this thesis, the researcher
focused on 04 following basic contents: regulations on determining the taxable
income, regulations on determining deductions or deductible expenses in
calculating income taxes, regulations on tax rates and regulations on
determining the tax incentives
1.1.3 Principles , methods and processes to adjust tax
Principles of income tax amendments : Ensuring fairness and
transparency; Associating with the policy and economic development policy in
certain historical period; Covering revenues; Ensuring the flexibility
Adjustment method: Direct and Indirect adjustment method,
Administrative and non- administrative methods; Passive and active method
Adjustment Process: including 7 steps : Review and preliminary policy;
Analysis and assessment; Determining target, method and content for
4
adjustment; Building plans and roadmap for achievement; Building draft for text adjustment; Seeking comments and completing regulatory documents; Submiting
to authority for approval and promulgation adjusted income tax policy
1.1.4 The impact of income tax amendments
The impact of income tax policy adjustment has the highest social benefit when expense is equal to buying power of people and individual goods’ prices suit public goods
1.2 Requirements, conditions and roadmap for income tax amendments in context of Vietnam being a WTO member
1.2.1 Overview of the WTO
WTO is an international organization established in 1994, which set out the rules regulating commercial activities of member countries on the world scale WTO has three main agencies which are the Ministerial Conference, the General Council and the Secretariat whereas the Ministerial Conference and the General Council are decision-making agencies Members of the WTO are countries or customs territories which have economic autonomy
1.2.2 The requirements of income tax amendments as a WTO member
Requirements "Non discrimination" : the adjusted income tax rate for domestic entity and individual are also applied for business entity or individual
of other member countries
Requirements "Trade liberalization": This principle promotes the reasonable and fair adjustment and application of a tax rate and the regulations
of taxable income, tax exemption and tax incentives
Requirements of creating an environment of fair competition: WTO requires its members not to use the corporate income tax as a form of business subsidies for export performance
Transparency Requirements: WTO requires its members to implement measures to ensure transparency Government and its members have to publicize the income tax system and to ensure the public as well as domestic and foreign enterprises can easily access that system
Requirements "supports for developing and least developed countries":
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the positive impact to the income tax adjustment For example, the income tax
system needs to be amended in order to be in accordance with international
practices as well as to have roadmap to ensure the harmony of interests of
States and enterprises
1.2.3 The requirements and roadmap for adjustments of the income
tax in the context of Vietnam joining WTO
The requirements :
- Subsidies for industries and businesses in the manufacturing and export
area must be withdrawn
- Local and Foreign persons and legal entities must be treated equally
- The protection of intellectual property rights, the application of taxable
value, interventions of investment and trade must be respected and law
enforced
- Being transparent by publicing the draft legal text of the Government
and local governments on the mass media for public comments
Roadmap for the acceding countries: will be set up according to the
situation and context of actual negotiations with the Member States
1.2.4 Factors affecting the income tax adjustment as a WTO member
The objective factors:
- The domestic and international economical and social situation
- The expenditure needs of the State Budget also affect the
implementation of the commitments of reducing the tariff lines and the
implementation of income taxes unitedly and equally
- The conditions of the facilities of participating countries also greatly
affect the implementation of the commitments, especially commitments on
income tax
The subjective factors:
- Determination to implementing tax adjustments of the Government and
law enforcement agencies
- Qualification of officials and solidarity who are responsible and related
to the enforcement of income tax commitments as a WTO member
- Propaganda and guiding commitments
6
1.3 International experiences and lessons for Vietnam to adjust income tax
in terms of WTO membership
1.3.1 International experiences for income tax amendments in the context of being a WTO member
- International experiences on adjusstment of regulations for determining the taxable income:
+ CIT: supplementing income from transfer projects, exploration and exploitation rights, mineral processing, transfer capital contribution rights, the project participation rights, the business right to the taxable income
+ PIT: Generally, regulations on taxable income of other countries are relatively in common and cover all types of income However, the scope of income tax exemption also differs depending on the orientation of each country’s policy
- International Experiences for adjusting regulations on deductible expenses or other deductions when calculating income tax:
+ CIT: Tax laws of other countries all allow the deductions for actual expenses incurred related to manufacturing and trading activities of business enterprises which have invoices, documents They also encourage expenditures for research and development, training; controlling customer-care expenditure and not allowing personal expenditures
+ PIT: Most marital deductions applicable to personal income tax in other countries are divided into three groups: i) general deductions for taxpayers themselves; ii) the deductions for their dependents such as reductions for children, spouses and parents and iii) specific deductions
- International experiences for adjusting income tax rate:
+ CIT: In general, the corporate income tax rate adjustments in other
countries have been carried out in the tendency of decreasing
+ PIT: In recent years, many countries have reduced tax rates to improve the attractiveness of the investment environment in the country, attracting high skill workers from outside while some other countries also reduce the tax brackets
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- International experiences for adjusting regulations on income tax
incentives:
Tax incentives is the way one country issues a favorable tax policy than
other countries in order to attract investment The generally applied incentives
forms includes preferential tax rates, allowing losses transfer, time-limited tax
exemptions, tax credits reductions, allowing accelerated depreciation
1.3.2 The lessons for Vietnam to amend income tax in the context of being a
WTO member
- Adjusted taxable income must be clear, transparent and easy to
implement
Income tax systems of most countries are complying with general requirements
of the WTO, to ensure fairness and transparency
- Income tax rate should be adjusted decreasingly to support revenues
Reduced income tax rates will encourage investment in the country as
well as attracting foreign investors and consistent with the average level of
other countries in the region For personal income tax, due to different
economic – social conditions of each country, the calculation of personal
income tax is also different
- The income tax reductions/exemptions must be public and targeted to
specific objects
All countries identified reductions/exemptions of income tax for objects
who are generally responsible to nurture other objects However, the
reductions/exemptions does not applied to all the poor or difficult because this
group will be assisted by other charitable or subsidy programs
- The income tax incentives must be reasonable with each period
The income tax incentives depends on the conditions and purposes of
government in creating incentives for each country However, the given
preference must ensure fairness between objects, ensuring compliance with
international standards in order to assist the difficult as well as in accordance
with the WTO
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CHAPTER 2: PRACTICAL EXPERIENCES OF INCOME TAX AMENDMENTS IN VIETNAM IN THE CONTEXT OF BEING A MEMBER OF WORLD TRADE ORGANIZATION (WTO)
2.1 Commitments, condition and periodicity in amending Vietnam income tax in the context of Vietnam joining WTO
2.1.1 Participation of Vietnam in WTO
Negotiation procedures of Vietnam’s WTO participation could be divided into four steps:
- Firstly, on 04/01/1995, Vietnam officially sumbit the Participation Letter to WTO On 31/01/1995, WTO General Council set up a Working Team (WP) including 40 people from member countries in different economics
- Secondly, In October 2003 Vietnam submitted to WP a Welcome report
on goods and services, action plans (AP), including AP in law building, CVA, TBT, SPS, TRIMs, TRIPs
- Thirdly, the dossior of legal agreement in the WTO participation of
Vietnam was drafted from Round 7 of WP when the prepartion of draft report
of WP (DEFR) was agreed
- Forthly, according to the Notice on 12/12/2006 of WTO Secretariat, on
11/01/2007 Vietnam has officialy become the 150th member of this important organization
2.1.2 Amendments of income tax before participating WTO
- CIT: In pre-Doi Moi period, Vietnam kept the budget deduction regime because economic organizations used assets of the state These deductions were adjusted by decisions of minister committee (the parliament now) After Doi Moi, Vietnam promulgated Profit Tax in replacement of deduction regimes, which initially organizations from all sector had equal tax declaration and payment in comparison with state sector
- PIT: From 1991, Vietnam introduced Ordinance on high income earner,
in 20001 and 2004 tax content for high income earner was adjusted however the achievement amendment was not high
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2.1.3 Commitments, conditions and periodicity in amending Vietnam income
tax in the context of joining WTO
- Requirements on income tax amendment
+ “Non discrimination”: a country should not discriminate between
“most-favored-nation” or MFN; domestic and foreign products, services or
nationals;
+ “Freer barrier”: open privileges in doing business for foreigner
individuals and enterprise as local ones even in export and import
+ Creating fair competition in Vietnam: abolish subsidies, tariffs and
other forms of protection such as export promotion to support exporting sector
and enterprises
+ Transparency: Vietnam should submit commitment in tariffs, when
market is opened the tax rates should not exceced the committed tarriffs
Table 2.1: Average commitment in tax rate
Unit: %
Tariffs deduction in Uruguay Round Sector
Average
Current
MFN
tariffs
Committed tariffs for WTO participation
Committed tariffs in final period
Deduction compared with current tariffs
Developed Countries
Developing countries
Agriculture
products
Industrial
products
+ “Supporting for developing and less developed countries” When state
revenue is affected by export and import collection the income tax amendment
should balance the deduction
- Commitments in income tax amendment of Vietnam for WTO
participation
+ Vietnam must develop the market economy and support the
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development of market economy The intervention mechanism to commerce and investment must be in accordance with signed bilateral and WTO agreements + Vietnam must show its active participation by bilateral negotiation result with WTO countries member and commit in abolishing subsidies and unfair supporting mechanism in business
- Vietnam must declare implementing international laws equally such as protection in copy rights, tax bases and intervention methods in commerce and investment after its participation in WTO
- The periodicity for Vietnam would be outlined in the first 12 years from the participation year being a non-market economy After that deadline the economy reform would be considered in comparison with other economies
2.2 Income tax amendments of Vietnam in practice in the context of being WTO member
2.2.1 Income tax collection in period of 1999-2012
- Income tax collection in period of 1999-2007
Revenue collection increased continuously, next year collection was higher than last year collection by about 15-25% CIT played a considerably important percentage in total revenue, which accounts for about 24-25% In the meantime, collection from high income earner (Personal Income Tax now) was only about 1,9-2,3% of total collection
- Income tax collection in period of 2008-2012
Revenue collection in this period still increased but unstable For example,
in 2008, 2010 and 2011 revenue collection reached by 20%, however those in
2009, 2012 only were 3-5% Collection from PIT increased lastly in comparison with total collection Its percentage is about 5-6%, increasing by 2-3%
2.2.2 Contents of Vietnam income tax in the context of being a member of WTO
- Amendment of taxable income:
+ CIT: More transparency, from 1/1/2009, taxable income was divided to income from main bussines and income from other bussses
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+ PIT: On 21/11/2007, National assembly promugated Personal Income
Tax in replacement of tax for high income earner The new PIT included
individual and household business from CIT subjection to PIT subjection
- Amendment in deductible expenses:
+ CIT: restriction in fast depreciation not exceed 2 times; deductible
expense include expeditures in eduction, training, increasing the threshold for
entertaiment expenses to 10%;
+ PIT: increase deductible expenses for income form business; income
from employment of residents such as social insurance and medical insurance
- Tax rate amendment:
+ CIT: From 2007 to 2008, normal tax rate of 28% was applied for all
enterprises From 2009 to now, PIT tax rate has been adjusted from 28% to 25%
+ PIT: CIT Law in 2007 has applied progressive tax bracket and statutory
tax rate for residents and each rates for each income for residents and
non-residents
- PIT tax exemption: Being WTO member from 1/2007, Vietnam has
abolised tax allowance for exporting textile companies For enterpises whose
tax allowance was cancelled , from 2012 could decided to earne allowance for
remaining period in respect to its curent condition
2.2.3 Method and procedure for amending income tax in Vietnam practice
- Amemding method: based on surveys, opinion to select proper content
before promugating Therefore, management body can review and summarize
income tax policy implementation for proper amendment
- Amending procedure: Follow steps in law issuing
2.2.4 Affects of income tax amendment to Vietnam in the context of being a
member of WTO
- Revenue collection:
+ CIT: From 2007 when Vietnam joined WTO, PIT increased
significantly Although in 2009, tax rate was adjusted from 28% to 25%,
business household and business individual are excluded from CIT (to PIT),
PIT collection in that year decreased but increased in following years
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+ PIT: From 2009, the replacement of new CIT tax for tax on high income earner did not change PIT collection volume However, in 2010, PIT collection increased by 83,6%
- Affects of personal income tax and corporate income tax to individuals and businesses
The author has conducted a survey on businessses, individuals by applying SPSS to analyze affects of amending two tax types on subjects respectively
Amended corporate income tax and personal income tax has decrease the price of individual goods and public goods in acccordance with customer expenditure as describled in picture 2.5
Picture 2.5: Result after amending corporate income tax and personal income tax
2.3 Evaluation on Vietnam income tax amendment in context of being a member of WTO
2.3.1 Positive effects on Vietnam income tax amendment in context of being a member of WTO
- Meeting WTO requirements: Vietnam income tax amemdment has a
transparent, explicitly, fair and non-discriminable route
- Meeting the committed roadmap: Vietnam income tax amemdment has
been implemented step by step, fairly, efficiently in accordance with committed route in next 3-5 years supporting as a developing country
Variable
Co-efficient:
High belief threshold
Lag
0
Note:
- Variable 0001 is variable of changing corporate income tax and personal income tax
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- In accordance with Vietnam practice and current legislation:
Amendments on personal income tax and corporate income tax does not affect
significantly to taxpayers, taxbearers, goods supply and demand
2.3.2 Negative effects on Vietnam income tax amendment in context of
being a member of WTO
- Taxable income:
+ CIT: The corporate income tax law does not regulate whether income
from project transfer, transfer of right on exploring mineral resource, transfer of
equity contribution, income from business advantage are covered by the law
+ PIT: the law does not cover income from authorizing house sale, land
whose authorizer has the right on deciding assets
- Deductible expenses:
+ CIT: Thin capitalization has not been regulated to ensure the correction
purpose of using equity contribution and the safety of economy
+ PIT: Family allowance is unflexible, some expidture on medicine,
education of dependents is undeductable
- Income tax rate:
+ CIT: The reduction of PIT rate for medium and small businesses has
unclear route Besides, the criteria for determination of SME mainly rely on
equity and lobour, which is not correct and follow the international practice
+ PIT: Regulation of PIT on stock transfer with two taxing method still
has disadvantages
- Corporate income tax incentive: Unexplicitly, misunderstanding in
implementation Besides, the goverment should include additional review on
supporting sector, industry and regulate more allowance for expending business
and allowance for income from transfering certificate on pollution reduction
2.3.3 Reasons for Negative effects on Vietnam income tax amendment in
context of being a member of WTO
Uneffective self-assement machinism, cash economy, policy reviews
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CHAPTER 3: SOLUTIONS TO INCOME TAX AMENDMENT IN THE
CONTEXT OF VIETNAM JOINING WORLD TRADE ORGANISATION (WTO) 3.1 The international context and the income tax amendment trend in the context of Vietnam joining WTO until 2020
3.1.1 The international context and Vietnam situation
- The international economic integration has been complicatedly taking place in terms of economic and political factors due to the influence of great economic forces
- Since Vietnam joined WTO, the international economic intergration, both in the past and in the future, has been being multipolar and multi-area
3.1.2 The income tax amendment trend in the context of Vietnam joining WTO until 2020
- Countries applied private capital economic model which are leaning on the development of giant economic corporations would rather corporate income tax than personal income tax
- While, the trend in medium and small economies are in the favour of the amendment of applying progressive tax rate which may support medium and small enterprises
- The school of salary fund taxing (i.e the United State) increases tax rate with the aim of boosting social benefit while reducing business taxes to enhance their business competitive ability
- The new members of WTO want to encourage investment, to attract more capital and to open more their markets usually employ low tax rate
3.2 Targets and viewpoints of income tax amendment in the context of Vietnam joining WTO until 2020
3.2.1 Targets of income tax amendment until 2020
- General targets: The Vietnam Tax System Reform and Modernisation
period 2011-2020 stated: The target of Vietnam income tax amendment in the coming years is represented in new income tax type, taxpayer, tax rate, taxing point, tax structure,
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- Detail targets:
+ Corporate income tax: reduce tax rate under an appropriate route;
simplify incentive policy by narrow investment area which need to be
encouraged; supplement regulation on deductible expense,
+ Personal income tax: Amend and supplement with expanding tax base
and clarifying taxable income; simplify the taxable method of each type of
income; adjust the number of tax rate to make it appropriate to types of taxable
income and taxpayers,…
3.2.2 Viewpoints of income tax amendment until 2020
- Taxable income admendment: In the context of international integration,
there are many types of corporate income and personal income which appertain
taxable income but have not been interpreted in the Vietnam Corporate income
tax and Personal income tax Therefore, the viewpoint of income tax
amendment should be expension of scope of taxable income in order to
continuously integrate, ensure fair competion and be appropriate to the WTO’s
similarity principle
- Amendment of deducted expenses: Currently, Vietnam has become a
WTO member, hence Vietnam must amend tax policies consistent with the
principles of WTO On the other hand, because of the competition of FDI
attraction, Vietnam income tax must be relevant to international standards
which help foreign investors easily operate their business in Vietnam
Therefore, the Vietnam income tax should be harmonized with international
standards and internationally collaborative
- Amendment of income tax rate: With the aim of the income tax system
harmonizing both the interest of the taxpayer and the State, Vietnam should
have specific scientific researches to provide appropriate income tax rates In
particular, it should analyze the tax burden of different social groups in order to
accordingly amend tax policies The income tax system in our country should
harmonize tax rate within the limits of 15% to 50%
- Amendment of Income tax incentives: It is necessary to continuously
thoroughly understand the principle of non-tax incentives to exporters Since
Vietnam joined the WTO, after 5 years, Vietnam has to eliminate incentives to
all goods other than textiles abolished since 2007 Therefore, guiding
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enterprises to convert corporate income tax incentives as export incentives abolished is very important Other incentives should continue to be researched
to promote the development of industries, sectors and localities where need to encourage investment However, it is necessary to ensure WTO’s principles of similarity and non-discrimination
3.3 Solutions to income tax amendment in the context of Vietnam joining WTO until 2020
3.3.1 Solutions of income tax policy amendment
- Taxable income amendment:
+ CIT: It is necessary to add income from transfer investment projects, income from transfer of exploration, mining and mineral processing right, income from transfer of the right of contributed capital, the right to participate
in the project and "provision reversal" to other income when determine taxable income
+ PIT: this type of tax should be amended and supplemented in the way
of abolishing allowances, subsidies currently unavailable (social security benefits) and salary-natured subsidies (area subsidy, attractive subsidy), simultanously add contents: "and other subsidies, allowances which is not salary-natured" to ensure the law does not become outdated when new subsidies, allowances are found
- Deductible expense amendment:
+ CIT: Vietnam should amend or supplement conditions of expenses deducted: certificate of bank payments for purchases of goods and services worth twenty million VND or more In terms of the advertising cost and sales promotion, in order to match reality and reflect the nature of expenses, researches are needed to increase the controlled percentage up to 20% and check and eliminate some expenses out of controlled cost,
+ PIT: With the aim of being relevant to the policy of reducing the rate of mobilization of taxes, charges and fees in the Tax Reform Strategy period
2011-2020 and perspectives, objectives and requirements of the amendment, supplement of the PIT law, it is necessary to raise the personal allowance from
4 million/month to 8 million/month (96 million/year) and the dependent allowance from 1.6 million/month to 3.2 million/month
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- Tax rate amendment:
+ CIT: study to reduce the tax rate from 25% to 22%, for small and
medium businesses (possibly defined by the criteria of annual revenue lower
than 50 billion VND and profit no more than 05 billion) are 20% tax rate
+ PIT: individuals earning income from salary, wages can be applied as
the current tax rate In terms of business income or income of independent
practitioners, researches are needed to apply the tax rate based on annual
revenue without allowance deduction Accordingly, 03 rates can be suggested:
1% for individuals conducting trade business, 3% for production sector and 5%
for the service sector
- CIT incentives amendment:
+ Industry incentives: the additional regulation on invested enterprises
producing industrial supportive products applied the 20% of tax rate on
incomes is needed This income is not applicable for exemption or reduction In
addition, it is necessary to add regulation on tax exemption, tax relief for
investment in installation of new production lines, expansion of production
scale, innovation in production technology
+ Tax incentives for enterprices with abolished export incentives: it
should be regulated if preferred choice of switching from the date of businesses
licensed establishment certificate before the date the Decree No 24/2007/ND
-CP taken into effect does not need to synchronize the incentive income tax rate
with the tax exemption and tax reduction Enterprises fully undermined the time
of exemption and reduction no longer handle again If the incentive tax rate is
still available, enterprises have the choice of switching to preferential tax rates
under other conditions
+ Requirement on transparent intepretation of tax incentives : To be
consistent with the orientation of investment encouragement, it is necessary to
amend or supplement terms of preferential subjects regulated in the Law on CIT
+ Requirement on transparent provisions of some income is not tax
incentives: To meet the practical requirements and solved problems of
enterprises, it should specify incomes are not entitled tax incentives The other
income related to production and business activities are tax incentives, other
than income from capital transfer or assigning the contribution
18
3.3.2 Solutions of amendment method
- Applying the method of Regulatory Impact Assessment (RIA) as amending income tax system in benefit groups and associated costs: Through
RIA analysis, the authors propose amendments of PIT and CIT in different levels such as: Tax waivers for small and medium enterprises; Reduced tax rates of CIT to 20% - 22%; Increase in the deduction for salary and business income earners; Allow tax deductible corporate income tax and personal income tax and other tax to avoid double tax; Add the taxable income sources
- Applying the overall balanced model to define sectors and subjects to tax: Income Tax Law was enacted, in order to come into practice, the law
should be adjusted so as to ensure the effectiveness In the long term, income tax will account for a large proportion of the revenues of the budget, thus it should be required to apply overall balance model before defining the subject, industry sector or individual to collect taxes, tax waiver, tax exemptions to ensure fair, transparency and efficiency of tax policy
3.3.3 Solution of amendment process
In the process of drafting decrees, circulars guiding the Law on use of non-agricultural land tax, to deploy the practical experience , General Department Taxation (GDT) has piloted the the non-agricultural landuse tax policy in 3 provinces: Ha Noi, Can Tho and Bac Ninh Through the pilot, GDT can draw some experiences in implementing the revised policy for income tax
on the object selected pilot and pilot organizations
3.3.4 Supportive Solutions
- Synchronize the tax administration mechanism and other related policy mechanism: Research and apply Advance Pricing Aggrement mechanism in Vietnam; Complete and comprehensively reform mechanisms and policies on landuse management, cashless payment, business registration, registration on import and export, accounting and price
- Solution to taxpayers: Strengthen taxpayer service; Encourage and promote tax consulting, accounting, auditing services and tax agents
- Solution to the tax authorities: Further reform income tax management system; Enhance training tax officials; Mounting responsibilities and salary
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increase, payoff to individuals and organizations; Supply office equipment and
computerize tax administration
3.4 Conditions for implementing solutions to amend income tax in the
context of Vietnam joining WTO
3.4.1 Objective conditions
- Economic development situation and foreign and domestic economic
context:
+ The domestic economic situation: Vietnam's economy has been passing
through a difficult period with growing bankrupcy The majority of small
private businesses can not access bank loans, state economic groups are also
falling into the debt crisis
+ International economic situation: By the end of 2012, the world
economic situation found still not much sign of positive changes after the crisis
Many European economies fell into recession and eventually a common
currency area in Europe return to recession again in the third quarter of 2012
- Economic condition:
+ Income and living conditions: The economic development taking place
in stages that require the income tax admendment to suit each stage
+ Conditions of business culture: When tax rate adjusted higher (in terms
of absolute value), the psychology of tax evasion, perjury even change his
nationality or abandon the business happens Typically entrepreneurs in
developing countries are often better compliant with the law
3.4.2 Subjective conditions
- The execution of laws: When residents and business people are highly
compliant, the amendment of income tax policy is obeyed
- Habits and ways of managing of the object and subject of management:
The habit of "relying on power, position and relations" in the transitional period
leading to the lack of transparency and fairness in business and income tax
- Human resources: Human resource management to meet the
requirements of modern tax administration requires additional strategies, both
quantity and quality upgrade for this team There should be clear policies,
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consistent in recruiting, training and financial incentives to improve the quality
of human resources for the tax authorities
*