Tax-Assignment_A1_Nguyen_Anh_Tuan_F11-089

D1 Provide supported and justified recommendations for developingeffective tax systems and legislation that meet key principles in a global context LO4 Evaluate the impact on organizatio

Assignment Front Sheet

Student Name/ID/Class (V)Nguyen Anh Tuan ID:F11-089 (E)18-01-1999 (Class)F11B

Unit Title Unit 30: Taxation

Assignment Title TAX1: Taxation Systems and the Legal and Ethical Considerations

Submission Date 06 November 2019 Date Received

1st Similarity Report

In This Assessment You Will Have Opportunities To Provide Evidence Against The Following Criteria.Indicate The Page Numbers Where The Evidence Can Be Found

Achievement Summary

Assessment

Criteria In the assessment you will have the opportunity to present

evidence that shows you are

able to:

Evidence (page no) Achieved (tick) Verification Internal

First Attempt submission Re- LO1 Analyse taxation systems and the legislation which

governs them

P1 Analyse taxation systems and

consider taxation legislation that will have given implications on national taxation

M1 Critically analyse and compare

taxation systems in different countries

D1 Provide supported and justified

recommendations for developingeffective tax systems and

legislation that meet key principles in a global context

LO4 Evaluate the impact on organizations of the legal and

ethical constraints associated with taxation responsibilities

P4 Evaluate the impact of key legal

and ethical constraints on different organisations

M4 Critically evaluate the impacts of

key legal and ethical constraints

on application to different organisations, providing supporting conclusions and recommendations

D3 Provide supporting and justified

recommendations for responding to and minimising the impact of legal and ethical constraints for a range of international examples

Assignment Feedback

Formative Feedback: Assessor to Student

Action Plan

Summative Feedback:

Grade:

FOR INTERNAL USE ONLY

2 Taxation systems in detail and consider taxation legislation that will have a

given implication on national taxation

10

2.6 The roles and responsibilities of tax practitioners 18

3 The key ethical and legal constraints that affect organizations and the impact of

these for different organizations

18

3.1 Tax compliance and the solution to encourage tax compliance 18 3.2 Ethic of tax payers, is tax avoidance ethical or unethical 20

3.4 Evaluate the impact of these for different organizations 21

My name is Nguyen Anh Tuan and I am a tax consultant for HAPRO Corporation.HANOI TRADE JOINT STOCK CORPORATION is called "HAPRO" is a largemember enterprise of BRG Group HAPRO was founded in 2004 and follows thepilot model of the parent company – subsidiary (haprogroup.vn, 2019) With theorientation and direction of BRG Group, HAPRO continues to promote domesticbusiness activities, import, and export of agricultural products, and production ofconsumer goods HAPRO is striving for the benefit and satisfaction of Vietnameseand international customers In addition, HAPRO is in the process of developing

towards a multidisciplinary corporation and becoming one of the leading brands inVietnam and reaching out to the international market In 2017, HAPRO contributedVND 7,905,855,430 to the government's budget revenue, so it can be seen thatHAPRO plays an important role in the state budget This research paper is a report ofHAPRO tax advisor, to provide tax-related information and legal tax avoidancemeasures for HAPRO businesses This report provides information mainly onVietnam's tax system and the international tax system for research purposes.

To specific, the report contains the following:

1 Identify the Tax system and its importance to organisations andgovernments

2 Identify and describe the tax system in Viet Nam

3 The impact of the key ethical and legal constraints on the organisation andevaluate the consequence of these for other organisations

1 Tax system and the important of taxation

1.1 Definition of tax

 According to Julia (2019), Taxes are contributions that organizations andindividuals must pay to the State Budget on the principle of non-return on thebasis of law

 It can be seen that taxes are the main revenue of the government and if withouttaxes the government will not be able to operate tax revenues are used to various

purposes such as construction, maintenance, and development of public facilities,and improvement of the country's economy

1.2 Characteristics of tax

Taxation is compulsory

Taxes are revenue of the State Budget for general purposes, for all citizens andorganizations when eligible to pay taxes Spending money to pay taxes doesnot bring direct benefits to taxpayers, but they still have to pay because taxesare an indispensable revenue source for the state Therefore, the State willapply penalties to citizens who fail to fulfil their tax payment obligations(phapluatthue.vn, 2019)

Tax is Indirect- Return

Citizens or organizations have to pay taxes when eligible and they will notreceive any direct benefits from paying taxes, however, there is indirectreimbursement through the use of tax by the State for the general needs of thesociety such as national defines, improvement of social facilities, and welfareand so on (opentextbc.ca, 2013) For the reason, Taxation is a tool for theGovernment to redistribute income and wealth and it helps to balance the gapbetween rich and poor in the whole country

Tax has high legality

The state is the only entity that imposes taxes and vice versa, it is the mainmaterial means for maintaining state power According to "Clause 2, Article

138 of the Vietnamese constitution", the government has the right to imposeadministrative fines on businesses or individuals that commit tax evasion iffound out

1.3 The main functions of tax

Taxation has two main function including contributing to state budgets and regulatethe macro-economy

 Taxes constitute a major revenue source of the State budget In order to manageand operate the social economy, the state uses many tools such as planning, laws,

financial policies, and so on In the above tools, monetary and financial policy

plays the most important role and Tax is an important tool to perform the role of

macroeconomic management In addition, the government also has revenues from

activities such as borrowing, selling national resources, aid, and so on

(voer.edu.vn, 2017)

Year Total taxes and fees (VND

billion) % compared with total state budget revenue % Compared with GDP

In UK, HMRC achieved record high tax revenue of 60 billion pounds in

the tax year ending in April 2018 This figure represents an increase of

5.4% or nearly 1 billion pounds of the previous tax year In particular,

more than 186 billion pounds of income tax, 128.6 billion pounds of VAT

and 53.3 billion pounds of corporate tax (HMRC, 2018).The tax

authorities' compliance of businesses with production increased by £ 1.4

billion to £ 30.3 billion, far exceeding the annual target

 In the macro-economy, Taxes have many important roles such as promoting

investments & economic growth, stabilize prices & curb inflation, redistribute

social income and wealth, protect domestic production and development

international economic integration

- Taxation helps promote investments & economic growth: Tax policies help

reducing social costs and promoting economic growth When the economy

grows, government will adopt a number of tax incentives to attract investment

and stimulate production When the economy develops and is stable, to

prevent the danger of inflation and excess crisis, the state uses taxes to reduce

the speed of mass investment and reduce the consumption of society For

instance, Tax exemption for 4 years, reduction of 50% of tax payable for the

next 5 years with the income of enterprises from implementing new

investment projects in the field of socialization carried out in geographical

areas with difficult economic conditions (ketoanleanh.edu.vn, 2016)

- Taxation helps stabilize prices & curb inflation: The main cause of inflation isdue to the increase in the supply and demand of goods leading to increase inthe price of goods or an increase in input costs Therefore, the Governmentapplies taxes to curb inflation and stabilize prices If supply is smaller thandemand, the state reduces the income tax to stimulate production investment tocreate more products and increase taxes on consumer goods to reduce demand.

If inflation is caused by rising costs, rising unemployment, a stagnation ofeconomic growth, the state cuts taxes on costs, stimulating labor productivitygrowth (voer.edu.vn, 2019) For example, in the face of price changesaffecting life, the Government has decided to increase the minimum wage foremployees of state agencies by 20% in 2008 On the other hand, an estimated1.8 million retirees will be entitled to a social insurance benefit of 20%increase

- Taxation helps redistribute social income and wealth: Through income taxes,the State plays a macro-regulatory role in the field of wages and income, limitsthe gap between rich and poor, and advances social justice will contribute to aredistribution of a part of the income of the rich in society For example,According to Article 22 of the 2007 Law on Personal Income Tax, Theapplication of income tax deduction to workers with labor contracts of morethan 3 months with a specific enterprise who earn more than 5 million / monthwill be subject to 5% tax and gradually increase to the highest tax rate of morethan 80 million / month will be subject to a tax rate of up to 35%(luatvietnam.vn, 2019)

- Taxation helps protect domestic production & facilitate international economicintegration Nowadays, the trend of economic integration is growing strongly

in the region and in the world Therefore, in order to stimulate thedevelopment of domestic production and stimulate the production of exportgoods, the State has imposed very low or no tax on export goods Low importtax on goods, machinery and equipment, especially luxury consumer goods.According to the ASEAN Trade in Goods Agreement (2016), in order toensure fair competition between imported goods and domestically producedgoods in the context of reducing import tax to 0% for goods undercommitments international In addition, Pursuant to Clause 4, Article 1 of theLaw amending and supplementing a number of articles of the Law on Special

Consumption Tax 2014, alcohol must pay SCT, for wines with a concentrationgreater than 20, they will be subject to the tax rate of 65% from the year 2018.

2 Taxation systems in detail and consider taxation legislation that will have a given

implication on national taxation

2 1 Taxation system and classification

2.1.1 Taxation system

- Taxation system consists of two parts including tax policy system and taxadministrative system About the tax administrative system, TheGovernment has been implementing many measures to improve thetransparency of policy institutions and tax administration, creatingfavourable conditions for taxpayers According to Mr Xuan Nghi (2016),for Vietnam, the process of reforming and modernizing the tax system with

a focus on institutional transparency and management has also been paidspecial attention by the Government, especially strategy of reforming taxsystem in the period 2001-2010 and period 2011-2020 in order to build amodern, effective and effective Vietnam tax industry based on three basicfoundations: policy institutions; tax administrative procedures; humanresources and information technology applications

- About tax policy system, after application of the "Doi Moi" policy (1986),Vietnam has gradually reformed its tax policy in order to attractinvestment and adapt to international practices In principle of non-discrimination, the current tax policy is adjusted towards transparency andsimplification In addition, citizens and organizations, or goods andservices of WTO members or within the ASEAN Free Trade Area (AFTA),are also entitled to tax incentives in accordance with the schedule andprovisions of the related convention (luatviet.com, 2011)

In the UK, Corporate tax depends onthe size of the business profits and itscorporate tax rate in 2017 is 19% and

For businesses investing ingeographical areas with difficultcircumstances or investing in scientificand technological development, theywill enjoy tax incentives of 10% and20%, respectively.

it could be reduced to 17% insubsequent years

Import – Export

Duties;

In general, all goods that crossVietnam's border are subject to importduties, except for some cases afterhumanitarian aid, transit goods andtransportation by border gatetranshipment or imported goods Fromabroad into the non-tariff area On theother hand, for luxury goods that will

be subject to high import duties, whilemachines, equipment, materials andsupplies used in production will beentitled to tax incentives or enjoylower import tariffs, or even 0%

Value Added Tax

on the value of goods and serviceswhich provided by the business Inaddition, VAT applies to the taxablevalue of imported goods

In UK, VAT is the third-largest ofgovernment revenue For eachdifferent products and services, therewill be different VAT rates and in 2011the standard VAT rate is 20%compared to 17.5% in previous years

In addition, the tax rate will bereduced by 5% for products such aselectric vehicles, gas, solid fuels, and

so on while zero-rated for productssuch as meat, books, vegetables, and

Beer; and so Tax rates for these itemsare usually very high and range from10% to 70% Goods and servicessubject to SST are also subject to VAT

- Reduce damage to the environment

- Prevent activities that are harmful tosociety

Personal Income

Tax (PIT)

Personal income tax includes incomefrom production and businessactivities, salaries, wages, investmentcapital, and so on For personalincome tax, when individuals have ahigh income, they will pay more taxes

16 years old and have a personalincome greater than £157 or have apersonal benefit greater than £6,025per year, they will have to pay nationalinsurance However, each individualwith different income will be subject

to different insurance rates(ionos.co.uk, 2019)

The Stamp Duty

(SDLT)

For citizens of England, Wales andScotland, they will have to pay theSDLT if they buy an asset or land at acertain price However, they can be

reductions in the following cases:

- The purchase price is less than £500,000

- This is the first purchase of eachindividual

2.1.2 Classification of taxation

2.1.2.1 Taxation methods

- Direct tax: Direct taxes include taxes that go directly to the person's income

that is paid directly to the government If personal income and corporation

income are more and more so the direct taxes that the business has to pay the

government are higher There are several types of direct taxes such as PIT,

CIT, import and export duties, and so on

- Indirect tax: Indirect taxes are taxes on goods and services that are paid

indirectly to the government It means that the tax burden for each user of the

same product or service is the same and there is no distinction between rich

and poor In essence, when the tax increases, the demand for goods and

services will decrease and vice versa It including VAT, excise duties, and so

on (Surbhi S, 2018) For example, in UK, applicable VAT rates are 0%, 5%,

and 10%, respectively The 0% rate applies to the export of goods and certain

services and there was an increase in the VAT rate to 20% (Textbook, chapter

10, page 364) Thus if the products and services have high value, the

customers will pay more tax when purchases because of the proportion rate tax

in the UK higher than Viet Nam

2.1.2.2 Taxation bases

- Income tax: Income taxes include a variety of tax types and based on

income sources that individuals or organizations earned such as incomefrom wages, profits earned from business activities, and so on