A recently-released World Bank report showed that Vietnam’s effective corporate income tax rate (CIT) stands at 15.7 percent, proving to be more attractive than Singapore (17 percent), Indonesia (16.7 percent), Thailand (17.9 percent) and Malaysia (21 percent).

“This reflects that Vietnam is giving tax incentives to businesses,” said the Doing Business 2015 report as quoted by Vietnam Investment Review.

“Vietnam ’s low CIT is contributing to making Vietnam ’s business climate more competitive. Firms from France , Hong Kong and Malaysia that we are advising to invest in Vietnam give a warm welcome to the country’s tax reforms,” said Tran Trong Binh, senior associate of French-backed law firm Audier & Partners.

“However, such a low CIT itself is not strong enough for the country to attract more foreign investors,” he said, adding many foreign investors said that Vietnam’s investment cost is 1.5-2 times higher than in other nations in the region, while tax-related time remains very high.

According to the report, in terms of tax payment, Vietnam has the highest compliance time in the region, with 32 payments for 872 hours annually for each enterprise. Meanwhile, the ASEAN-6 group (Indonesia, Malaysia, Philippines, Singapore, Thailand and Brunei) boast an average of 22 payments in 171 hours a year.

Further hindrance to drawing in foreign investment is Vietnam ’s total tax rate of 40.8 percent which is higher than the ASEAN average of 31 percent.

However, Hoang Thi Lan Anh, vice head of the General Department of Taxation Reform and Modernisation, stated that the tax sector has successfully reduced payment times by 290 hours each year through compliance with the government’s Resolution 19 issued in March 2014 on key solutions on improving Vietnam’s business climate and national competitiveness.

Meanwhile, the government required the time to be trimmed to 171 hours, equivalent to that of the ASEAN-6 group.

Anh claimed that in 2015 the tax sector will continue truncating the annual time by another 415.5 hours down to 121.5 hours, while the social insurance sector will speed up the payment of insurance packages by 285.5 hours, taking it down to 49.5 hours.

“This will mean the 171 hours target is feasible, creating a more favourable atmosphere for enterprises to perform” Anh said.

A report published by the Ministry of Planning and Investment on Vietnam’s economic institutional reform to improve competitiveness for 2015-2016 also stated that upon the coming into effect of the Law on Amending Some Articles of Excise Laws in January 1, 2015, total tax payment will be reduced to 167 hours per year.

“ Vietnam is making appropriate strides in tax administrative procedure reform,” said Joanna Nasr, a World Bank expert.

The World Bank suggested that in order to further reduce the time for tax payments, Vietnam will need to simplify regulations imposed on declaring and submitting value added taxes, obligatory insurance and corporate income tax as well as designing a new tax software linking financial and accounting software to automatise tax reporting requirements./. Enterprises relish low corporate income tax

Hanoi, January 26 (VNA) – A recently-released World Bank report showed that Vietnam’s effective corporate income tax rate (CIT) stands at 15.7 percent, proving to be more attractive than Singapore (17 percent), Indonesia (16.7 percent), Thailand (17.9 percent) and Malaysia (21 percent).

“This reflects that Vietnam is giving tax incentives to businesses,” said the Doing Business 2015 report as quoted by Vietnam Investment Review.

“ Vietnam ’s low CIT is contributing to making Vietnam ’s business climate more competitive. Firms from France , Hong Kong and Malaysia that we are advising to invest in Vietnam give a warm welcome to the country’s tax reforms,” said Tran Trong Binh, senior associate of French-backed law firm Audier & Partners.

“However, such a low CIT itself is not strong enough for the country to attract more foreign investors,” he said, adding many foreign investors said that Vietnam’s investment cost is 1.5-2 times higher than in other nations in the region, while tax-related time remains very high.

According to the report, in terms of tax payment, Vietnam has the highest compliance time in the region, with 32 payments for 872 hours annually for each enterprise. Meanwhile, the ASEAN-6 group (Indonesia, Malaysia, Philippines, Singapore, Thailand and Brunei) boast an average of 22 payments in 171 hours a year.

Further hindrance to drawing in foreign investment is Vietnam ’s total tax rate of 40.8 percent which is higher than the ASEAN average of 31 percent.

However, Hoang Thi Lan Anh, vice head of the General Department of Taxation Reform and Modernisation, stated that the tax sector has successfully reduced payment times by 290 hours each year through compliance with the government’s Resolution 19 issued in March 2014 on key solutions on improving Vietnam’s business climate and national competitiveness.

Meanwhile, the government required the time to be trimmed to 171 hours, equivalent to that of the ASEAN-6 group.

Anh claimed that in 2015 the tax sector will continue truncating the annual time by another 415.5 hours down to 121.5 hours, while the social insurance sector will speed up the payment of insurance packages by 285.5 hours, taking it down to 49.5 hours.

“This will mean the 171 hours target is feasible, creating a more favourable atmosphere for enterprises to perform” Anh said.

A report published by the Ministry of Planning and Investment on Vietnam’s economic institutional reform to improve competitiveness for 2015-2016 also stated that upon the coming into effect of the Law on Amending Some Articles of Excise Laws in January 1, 2015, total tax payment will be reduced to 167 hours per year.

“Vietnam is making appropriate strides in tax administrative procedure reform,” said Joanna Nasr, a World Bank expert.

The World Bank suggested that in order to further reduce the time for tax payments, Vietnam will need to simplify regulations imposed on declaring and submitting value added taxes, obligatory insurance and corporate income tax as well as designing a new tax software linking financial and accounting software to automatise tax reporting requirements.

VIR