Tax compliance will be observed more strictly given the recent changes in Vietnam’s tax policy, said experts of Deloitte at a recent seminar.
The Government is targeting a State budget revenue rise of 7% for this year. Furthermore, following the country’s tax system reform strategy for the 2011-2020 period, the domestic tax revenue would account for more than 70% of the total State budget revenue by 2015 and over 80% by 2020, with the annual growth of 16-18%.
On the other hand, the tax authorities must deploy an approved plan for tax extension for small and medium-sized enterprises in accordance with the Prime Minister’s decision issued in April this year. As planned, around 200,000 businesses will enjoy a tax extension worth VND7 trillion.
The National Assembly also approved a resolution on a 30% reduction of corporate income tax for certain enterprises in 2011.
The implementation of the above plans will put huge pressure on local tax agencies. To complete the targets of budget revenue, tax agencies would enhance the inspection on tax compliance of businesses.
The tax advisory manager of Deloitte Vietnam, Dion Thai, said enterprises enjoying tax incentives or those who incurred losses in two consecutive years would receive the most scrutiny. Regarding the tax incentives, several issues are demanded for explanation, such as preferential level, and obedience to the local system of accounting standards.
As for transfer pricing, multiple violations are usually detected, including performing transactions not matching market prices, and paying service fees to partners with no service rolled out.
Thai added tax agencies seemed less tolerant of tax violations and would be less flexible in interpreting tax regulations if those interpretations led to tax liability falling. Also, the collection of late payments and calculating their interest rate have become more rigorous.
Some tax agencies like those in Ba Ria-Vung Tau Province have applied electronic procedures in tax declaration, so there is little possibility of negotiating in case of late payment. Such procedures would be applied to 60-90% of the local enterprises by 2020.
Besides, the coordination between State agencies has also been reinforced. For instance, tax agencies are joining forces with customs offices, police departments, and immigration and licensing agencies to deploy inter-agency processes and enhance information exchange with other countries.
“If an enterprise went against any tax regulation, its director might be detained by immigration authorities,” said Thai as she gave a demonstration on the close coordination between agencies.