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World Bank & Japan support tax system

Released at: 13:56, 05/08/2019

World Bank & Japan support tax system

Photo: World Bank

$4.2 million financing agreement signed with central bank to implement Revenue Administration Reform Support Project.

by Doanh Doanh

The World Bank last week signed a financing agreement with the State Bank of Vietnam for a grant worth $4.2 million to implement the Revenue Administration Reform Support Project.

The project aims to improve the effectiveness of tax administration through the implementation of a comprehensive risk management system and a redesign of business processes and information technology. It will also support the modernization of the tax policy framework by assessing the impacts of tax policy changes.

“The World Bank’s commitment to this project is a signal of our broader commitment to working with Vietnam in strengthening fiscal performance and implementing growth-friendly fiscal reforms,” said Mr. Ousmane Dione, the World Bank Country Director for Vietnam. “By focusing on the tax system, the project will help enhance domestic resources mobilization, which is an important pillar of fiscal consolidation.”

Indeed, the changing composition of Vietnam’s tax revenues towards increased reliance on domestic sources poses both opportunities and challenges. This calls for enhanced efforts to strengthen tax policy formulation and modernize tax administration. There is a need to strengthen the performance of core tax administration areas, especially those with high impacts on tax compliance, operational efficiency and transparency. The tax policy framework should aim at broadening the base and rebalancing the tax mix to exert coherent impacts on sustainable revenue mobilization and reduction of tax-induced burden on growth and equity.

A major component of this project is the development of a roadmap to modernize the information technology (IT) system for tax administration and lay a foundation for IT infrastructure, so the General Department of Taxation can use modern IT solutions for business processes.

Another component focuses on building the capacity of policy makers to analyze and formulate tax policies. The project will analyze the impacts of proposed changes to core tax instruments, in line with Vietnam’s Tax Reform Strategy and international best practices. It also supports the preparation of the legislative framework to introduce a property tax.

The grant is provided by the Japanese Government through the Policy and Human Resource Development Program, which is administered by the World Bank.

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