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243 days a year spent following tax procedures
According to the Central Institute of Economic Management (CIEM), Vietnamese businesses have to spend 1,950 hours a year to follow the tax laws, while according to the International Finance Corporation, the figure is 1,050 hours. Le Thi Duyen Hai, Deputy Head of the Tax Policy Renovation Division under the General Department of Taxation, talks about the figures.
What would you say about the time Vietnamese small- and medium-size enterprises (SMEs) need to follow tax laws?
SMEs always have to spend more time and money to follow tax laws than bigger enterprises. It is because the enterprises have lower levels of management and capital. They have limitations in applying information technology.
A recent survey by the General Department of Taxation showed that directors of SMEs have to spend three times longer than directors of big businesses. The time is spent checking tax reports before submitting them to tax agencies and explaining relevant issues.
In Vietnam, SMEs account for a big proportion of enterprises. 60% of the 250,000 operational enterprises are SMEs.
You have said that SMEs, besides taxes, have to pay other expenses for paying taxes. What are the expenses?
Under the current laws, small and super-small enterprises have to pay expenses on tax registration and declaration. Some enterprises can enjoy tax remittances, and in this case, they have to spend time on the procedures for tax remittances. Most small enterprises cannot print bills themselves; therefore, they have to pay money to purchase tax bills. All these are official expenses stipulated by the laws. As for unofficial expenses, the General Department of Taxation still cannot calculate the expenses, as it has not made a thorough survey of the matter.
CIEM’s and IFC’s reports both showed that enterprises have to spend too much time to pay taxes. What is your comment about the reports?
There are some inconsistencies in the reports. The number of 1,950 hours declared by CIEM includes the time for regular accountancy operations (writing and collecting sale bills, writing them down into money accounts). As such, most of the time is being spent on accountancy operations, not paying taxes. The real time enterprises need to spend on following tax laws is much lower than the declared number of hours, estimated at several hundred hours a year.
Regarding the IFC’s report, the figure of 1,050 hours includes several hundred hours for social insurance. In international practice, collecting social insurance premiums is a task of taxation agencies. However, in Vietnam, this task is not assigned to taxation bodies.
The figures released by CIEM and IFC might have damaged Vietnam’s business environment. Why doesn’t the General Department of Taxation conduct a separate survey to give more reliable figures?
We signed an agreement on technical cooperation with IFC on July 17 on simplifying tax administrative procedures for SMEs. Within the project, we plan to take a survey to find out how much money and time enterprises have to spend to follow tax laws. We will hire independent firms to carry out the survey.
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