Tuan spoke at a conference to review the sector’s activities in the first half of the year, held in Hanoi on July 8, saying that the decree would be a legal framework to restructure the sector, while creating significant changes in the prevention of tax losses.
In addition, the sector needed to improve competitiveness and administrative reform, focusing on e-tax payments, as well as building data about taxpayers.
Furthermore, he said that reported tax collections of 48 percent in the six month period were relatively high. Tax collections from individuals, value added and corporate incomes increased 12 to 16 percent.
“It means that both the business’s activities and tax management have been effective,” he added.
Additionally, Da Nang and HCM City reported high increases of 18 to 22 percent in tax collections for the January-June period.
Phi Van Tuan, Deputy Chief of the General Department of Taxation, said tax collections from production and business in the first six months of the year were high, reaching some 393.5 trillion VND and meeting 48.6 percent of the set targets. Of this, tax collections from crude oil were 21 trillion VND, while domestic tax collections were 373.2 trillion VND.
Also, tax collections from the industrial and service sectors increased by 23 percent, reaching 54 percent of the set targets. Taxes paid by foreign directed companies met 49 percent of the set targets, while personal income tax reached 56 percent of the targets.
Nguyen The Manh, Director of Hanoi Taxation Department, said they have often monitored businesses to develop correct overviews about incomes. At the same time, they also helped firms resolve difficulties in preparing their tax reports.
Vietnam should accelerate the review and amendment of its tax policies to maintain the country’s advantages after joining the FTAs and TPP international trade agreements. This could help Vietnam retain its position as a key investment destination for multinational companies.
Tuan told the BEPS Action Plan – International Practices and Vietnam’s Perspectives conference held here last week that the approval of the Base Erosion and Profit Shifting (BEPS) action plan by OECD and the G20 in 2015 has been an important effort for overall reform in international tax regulations.
“The reform aims to ensure equality and improve effectiveness of the tax system around the world,” Tuan said.
He added that the national 2016-20 socio-economic development plan foresees continued tax reforms, modernisation of policies, and enhancement of transparency while increasing tax collections.
Dang Ngoc Minh, Deputy Chief of the General Department of Taxation, said BEPS was a technical term referring to the negative effects of multinational companies’ tax avoidance strategies on national tax bases.
BEPS is used in a project headed by the OECD which produced detailed reports in September 2014 in response to seven actions agreed previously. The project is said to be an "attempt by the world’s major economies to try to rewrite the rules on corporate taxation to address the widespread perception that the corporations do not pay their fair share of taxes.
On October 5, 2015, OECD announced the completion of the project with 15 action programmes to prevent tax evasion of multinational groups.
“Statistics from OECD showed that the yearly tax losses due to BEPS were between 100 billion USD and 240 billion USD which was equivalent to 4 to 10 percent of annual corporate income tax,” Minh said.
He added that in developing countries including Vietnam, which have been dependent on corporate income tax, BEPS’s effects on tax collections were huge.
He also said that BEPS had often been implemented by multinational companies by exploiting tax gaps and asynchronous regulations in tax policies. The companies would take advantage of the shortcomings to reduce their profits or shift profits into other countries or territories which have low taxes or tax exemption. This could help them lower their corporate income tax.
Diego Conzales, advisor of OECD Tax and Development Programme, said developing countries needed to upgrade the rules for taxation of multinationals to reflect changes in the underlying and digitalised economy and ensure that the system is perceived as fair.
From business perspectives, Chas Roy Chowdhury, a representative from the Business and Industry Advisory Committee and head of Taxation at ACCA, said that double taxation was harmful for businesses and prohibits cross-border trade.
“Dispute resolution is the key to mitigating the risk of double taxation arising from the uncertainty BEPS has created in some areas,” he said, and added that the mechanism must be robust, efficient, predictable and fair and more than just a political commitment.