World Bank plan to include tax payment times in measurements may see Vietnam fall a number of places.
Vietnam may rank lower in the 2016 Doing Business Report as the World Bank (WB) plans to extend measurement indicators to calculate the number of hours needed to make tax payments.
This was one of concerns raised among participants at the “Tax Payment Index and Reform Proposals for Vietnam” conference held on January 15. Ms. Joanna Nasr, co-author of the WB’s Doing Business Report, recognized that Vietnam’s efforts over recent years to reduce tax payment times are on track.
In particular, reforms eliminating the requirement to submit invoices and bills and adjustments to tax payment times will help taxpayers make payments more easily.
The last report released by the World Bank, in June, showed that Vietnamese enterprises spent 872 hours each year paying taxes and insurance; much higher than regional and global averages and affecting the overall competitiveness of the economy.
Ms. Nasr said that the existing calculation methods for the report have been in place for ten years and applied in 189 countries, and the World Bank now plans to change the calculation method by extending measurement indicators. “The current calculations measure the burden of administrative procedures in the preparation and submission of tax declarations,” she said. “In the 2016 Doing Business Report the indicator will measure post-declaration processes such as inspection, complaints and refunds, which are also an administrative burden for enterprises.”
Ms. Nguyen Thi Cuc, Chairwoman of the Vietnam Taxation Consulting Association, expressed concern that the new calculation method could see Vietnam lose places in the report. “Procedures for refunds need to be tightened, meaning that the time for implementation will increase,” she said. “If the report includes a calculation for this process, Vietnam’s ranking would be affected. Vietnam needs to prepare for this change, so that it is not left behind.”
Ms. Nasr also recommended other solutions. Vietnam could consider setting up a center for supporting taxpayers, by phone, email or online. This would help taxpayers understand and provide guidance when new administrative procedures are implemented.
Mr. Cao Anh Tuan, Deputy Director General of the General Department of Taxation (GDT) under the Ministry of Finance, said that the World Bank’s report does not comprehensively reflect the capacity of tax authorities but still provides useful information on taxpayers to the department. It also helps the tax industry review and propose stronger reform programs.
In the future the tax industry will continue to cooperate with relevant agencies to propose solutions for reforming administrative procedures. Its goal by the end of 2015 is to reduce the number of hours spent on administrative procedures from 872 to 171. This would be equal to regional levels and the task was assigned to the GDT by the Prime Minister in mid-2014.