Tax policy hinders business

Laws - Tax policies and custom procedures are still causing headaches for investors and are developing into a migraine for Vietnam's business environment.

Many investors believe improved tax policies and custom regulations would drastically improve Vietnam's investment climate.

"We suggest that customs administrations should introduce simplified clearances for low-value shipments. The key characteristics of such an informal clearance process include a simplified goods declaration and lower levels of scrutiny and intervention," said Alain Cany, chair of the European Chamber of Commerce in Vietnam (EuroCham).

Cany said duties and taxes where the liability was considered to be negligible should be waived to save costs, speed-up handling processes and increase Vietnam's import competitiveness.

Meanwhile, vice chair of Vietnam's Association of Foreign-Invested Enterprises Nguyen Van Toan said despite the many tax policy changes, some of them needed amending further to support enterprises.

For example, Toan said revenue from caddy and buggy services on golf courses should be exempt from the special consumption tax (SCT) because they were not obligatory for golf activities to be subject to the tax.

He said SCT application for these services would seriously affect some firms because the cost amounted to around 20-25 percent of revenue.

Phi Tan Cuong, an LG Electronics Vietnam Limited Company representative, said many enterprises saw the electronic customs model, after two months of implementation, had brought no change in costs and times for custom procedures.

"The entanglement here is that customs offices in Vietnam still require original paper vouchers, while foreign partners' custom procedures are carried out online," said Cuong.

Nguyen Thuy Linh, a representative of electrical cable company Ngoc Khanh, said payment for transport expenditures of foreign experts that her firm hired should not be treated as taxable income.

"My company often has to hire foreign experts to train local workers to operate its hi-tech machinery. These experts insisted on not paying this kind of tax, making it difficult for cooperation between enterprises and experts," said Linh.

Deputy minister of Finance (MoF) Do Hoang Anh Tuan admitted there was a gap between policies and practices, which was partly due to a lack of input from enterprises during the establishment of new policies.

"It was sad that when the MoF opened several online forums for regular discussions between the MoF and enterprises, an average of only two messages were posted each month," Tuan, adding that efforts to reform tax and custom procedures were considered a top priority.