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PM approves 10-year tax reform strategy
Prime Minister Nguyen Tan Dung has approved a 10-year tax reform strategy for 2011-20 in order to meet the needs of the market economy while enhancing revenues sources, increasing production capacity, and sharpening the competitiveness of domestic enterprises.
Government Decision No 732/QD-TTg issued on Tuesday stated that the tax reform strategy for the next 10 years would ensure transparency and aim at encouraging exports and investment, especially high-technology investment in remote and rural areas.
The comprehensive strategy encompass reforms to the value-added tax (VAT), personal and corporate income taxes, special consumption taxes, import-export taxes, environmental taxes, and fees and duties on mineral and land use rights and agricultural lands.
Under the plan, tax revenues would be increased by 70 per cent by 2015 and 80 per cent by 2020. By 2015, the State budget would be equal to about 23-24 per cent of gross domestic product (GDP).
By 2015, tax administration would also be modernized to global standards, with simpler administrative procedures that ensure over half of all enterprises use electronic filing.
Under the strategy, VAT on goods and services would gradually be reformed until a single tax rate could be applied by 2020. A road map to reduce the special consumption tax on tobacco, beer, liquor and automobiles would ensure regulation of the domestic market as well as the requirements of global integration.
Export taxes would be restructured to encourage high value-added exports while restraining exports of raw materials and minerals. Import taxes would be reduced, with the number of tax levels limited and trade barriers removed to meet integration requirements.
Ministry of Industry and Trade spokesman Pham Van Chat said that Viet Nam would cut over 3,000 tax lines this year, including 2,800 tax lines for agricultural products and 330 for information technology products.
Vietnamese products might be adversely affected if local producers do not prepare well, Chat said, since imported products were likely to flood the domestic market to take advantages of the preferential tariffs. Domestic producers needed to improve their product quality while building a strong local distribution network, he said.
Corporate income taxes would be reformed under road map to help companies enhance their capital and production and sharpen their competitive edge. Tax policies would aim at encouraging businesses to invest in high value-added production, support industries, bio-technology, and high-quality services. The tax reform strategy would also aim to make Viet Nam one of the four Southeast Asian nations with the most favourable conditions for doing business in terms of taxation.
Nguyen Dang Viet, a partner of the Biz Consult Law Firm, said the goal was not overly ambitious, predicting the country could slot in behind Singapore, Malaysia, Indonesia and Thailand for a favourable tax environment.
Natural resource taxes would be structured to encourage conservation and efficient use of the nation's resources. Natural resource taxes needed to be restructured soon to promote protection of the environment and avoid the current situation in which many companies receive huge benefits from exploiting natural resources but paid few fees, Viet said
Under the Prime Minister's strategy, a new Law on Fees would also be drafted to replace the current ordinance, and training of tax officials would be a key part of the strategy. The Ministry of Finance would be responsible for overseeing implementation of the strategy.
vietnamnews
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