VietNamNet Bridge - While some economists believe that Vietnamese businesses cannot grow because of heavy taxes, others believe that taxes should not be blamed.

Nguyen Minh Thao from the Central Institute of Economic Management (CIEM) believes that tax rates in Vietnam are high, which places difficulties on Vietnamese enterprises.

According to Thao, the taxes and social insurance businesses have to pay on their profit is ‘relatively high’ at 39.4 percent.

Nguyen Thi Cuc, chair of the Tax Consultancy Association, said on Phap Luat TP HCM that in a developed economy, the tax policy needs to be designed in a way which gradually decreased the ratio of tax collection on GDP, but allows increasing the amount of money collected from tax.

While some economists believe that Vietnamese businesses cannot grow because of heavy taxes, others believe that taxes should not be blamed.

According to the Tax Consultancy Association, the ratio of total expenses for tax and compulsory insurance premiums businesses paid on their net profit in 2014 was 35.2 percent, higher than the average level of 31 percent in ASEAN. Meanwhile, the figure is forecast to increase to 39.34 percent in 2016.

The Ministry of Finance (MOF) denied that the tax burden in Vietnam is heavy.

Vu Dinh Anh, a senior official from the ministry, said total collection for the state budget on GDP in Vietnam was 23.3 percent in 2011-2015, while the money collected from tax and fees accounted for 20.9 percent.

“There are 10 types of taxes in Vietnam. And one should look at the corporate income tax to find if taxes are too heavy for businesses. The current tax rates of 20-22 percent are absolutely not high,” Anh said.

An MOF report showed that if excluding the receipts from crude oil, the ratio of businesses contribution to the state budget from tax and fees on GDP would be 17.2 percent only. And if not counting the receipts from land use fees, the figure would be 15.6 percent.

Regarding major taxes, MOF said the most common corporate income tax rate applied since 2014 was 22 percent, and it had been cut to 20 percent since January 1, 2016, while preferential tax rates were 10 percent and now 17 percent. 

Meanwhile, the average tax rate in 83 countries is 27 percent (30 percent in the Philippines, 25 percent in China and Malaysia).

As for the import/export tax, the report showed that the proportion of receipts from import/export tax is on the decrease, from 9.51 percent of total budget receipts in 2005-2010 to 8.31 percent in 2011-2014.

Anh believes that what burdens businesses is the "underground" fee. A VCCI,report shows that 11 percent said the fees take up 10 percent of their revenue.


Kim Chi