Changes to Vietnam’s Customs and Tax Procedures in 2015-16

Hanoi –Vietnam’s Ministry of Finance (MoF) has announced the streamlining of a range of taxation and customs procedures in Decision Nos. 509/QĐ-BTC and 510/QĐ-BTC. The MoF has removed one and simplified seven taxation procedures, and removed seven and simplified 38 customs procedures.

Taxation procedures to be simplified include invoice issuing and printing, and tax exemption or reduction applications for individuals residing in Vietnam. The General Department of Taxation is expected to propose a relevant draft relating to the simplifying taxation formalities to the MoF. Customs procedures to be simplified include amendment to customs declaration and adjustment applications, and temporary import and re-export applications.

The decision comes in response to the government’s Decision No. 19/NQ-CP of March 12, 2015, a Resolution on main tasks and measures to improve the business environment and national competitiveness in 2015-16. The Resolution noted the reduction in time spent paying tax from 573 to 247 hours per year, expecting that this be reduced to 167 hours per year thanks to changes to the Tax Law which came into effect on January 1, 2015. It noted that time paying social insurance has been reduced from 335 to 225 hours per year, time taken to access electricity from 115 to 70 days, and that time spent on business initiation procedures was reduced from 34 to 17 working days. Businesses submitting tax reports online increased to 95 percent in 2014, from the previous 65 percent.

RELATED: Dezan Shira & Associates’ Tax and Compliance Services

Taking improving Vietnam’s World Bank ease of doing businesses rankings as a target, the Resolution displays a pragmatic approach to removing unnecessary obstacles to trade. The World Bank’s Doing Business 2015 report ranked Vietnam 78th, below its previous ranking of 72nd. The ranking is based on case studies analyzing how businesses operate in an economy during their life cycle, including procedures for start-up, construction permit, electricity access, property registration, tax payment, cross border trade, and contract enforcement, and labor market law.

The goal for the end of 2015 is to exceed the average ease of doing business ranking of the ASEAN-6, being Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam by the end of 2015. In order to do this, the targets for 2015 are to:

• Reduce tax and social insurance payment time to 121.5 hours and 49.5 hours per year, respectively.
• Increase the number of enterprises conducting tax declaration and tax payment online to 95 percent and 90 percent respectively, and ensure at least 90 percent of tax drawbacks comply with regulation.
• Shorten time for business initiation procedures to six days maximum.
• Reduce time spent on procedures to access medium-voltage electrical grid power to 36 days maximum.
• Ensure bankruptcy procedures are reduced from 60 to 30 months at the longest.
• Reduce time spent on export procedures from 21 days to 13 days and import procedures to 14 days.

RELATED: Vietnam on Track to Reduce Businesses’ Tax Payment Time

In order to reach the doing business average ranking of the ASEAN-4, being Indonesia, Malaysia, the Philippines and Thailand, by the end of 2016, Vietnam aims to:

• Reduce time spent on procedures to access medium-voltage electrical grid power to 35 days maximum.
• Ensure time spent on both taxation and compulsory insurance does not exceed 168 hours per year.
• Reduce time spent on obtaining construction licenses to 77 days maximum, including time spent getting agencies’ opinions on air flow, the environment, electricity, fire prevention, water and other relevant matters.
• Reduce time spent on procedures to obtain right to ownership and use from 57 to 14 days.
• Reduce time spent on export procedures to 10 days and import procedures to 12 days.

Import and Export: A Guide to Trade in Vietnam
In this issue of Vietnam Briefing Magazine, we provide you with a clear understanding of the current business trends related to trade in Vietnam, as well as explaining how to set up your trading business in the country. We also attempt to give perspective on what will be Vietnam’s place in the Association of Southeast Asian Nations (ASEAN) in 2015, and look at some of the country’s key import and export regulations.

Developing Your Sourcing Strategy for Vietnam
In this issue of Vietnam Briefing we explore how Vietnam’s Free Trade Agreements – and especially those via its membership in ASEAN – will affect foreign investment into Vietnam. We also go a step further and examine the specific, bilateral Double Tax Agreements that Vietnam has enacted, and how these can be further used to minimize profits and withholding taxes that would otherwise be levied upon foreign investors.

Tax, Accounting, and Audit in Vietnam 2014-2015
The first edition of Tax, Accounting, and Audit in Vietnam, published in 2014, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who need to be able to navigate the complex tax and accounting landscape in Vietnam in order to effectively manage and strategically plan their Vietnam operations.

• Previous Article Vietnam’s Q1 2015 Sees 7% Y-o-Y FDI Growth
• Next Article Vietnam News Brief: Tax, Bidding Guidance and Tariff Lines