Burdened with taxes and fees | SaigonMoney.com - The digital ...

Increasing State budget revenue collections and application of many taxes and fees are placing a great burden on businesses and citizens in the context of economic hardships.

Taxes, fees overlap

Nguyen Van Hung, a 40-year-old university lecturer in Hanoi, decided not to buy a car after one month considering how to spend his 10-year savings wisely. ?It is expensive to own a car here in Vietnam. I?d rather take my children to school on motorbikes,? he explained.

Quite a few people share Hung?s intention, which results in the poor sales of the members of the Vietnam Auto Manufacturers Association (VAMA) in recent months.

In Hanoi and HCMC, car-related taxes and fees have sharply picked up. License plate fees have shot up to VND20 million from VND2 million, while car registration fees surged from 10% to 15% in HCMC and 12% to 20% in Hanoi early this year.

Complete built-up vehicles are subject to import duties of 68-78%, excise taxes of 45-60% and value-added taxes of 10%. As such, a car in Vietnam is three times more expensive than itself before import and the same vehicle in developed countries.

?Taxes and fees have become unreasonably burdensome. I don?t want to buy a car anymore,? said Hung.

Dang Van Thanh, chairman of the Vietnam Association of Accountants and Auditors, said: ?Taxes and fees are overlapping each other, and become a burden on citizens and businesses.?

A recent report of the National Assembly Economic Committee states each Vietnamese is imposed a ratio of tax and fee payment to GDP at 1.4-3 times higher than other regional nations.

This, together with double-digit ?tax inflation? in the last five years, has dragged down the purchasing power of citizens.

Regarding personal income tax, the amount of taxable income subject to the 10% tax rate in Vietnam is some US$3,400-5,100 per year, versus US$4,900-16,400 in Thailand and US$3,800-9,500 in China.

Similarly, local businesses are levied a fixed 25% corporate income tax, while in other countries the rates vary from 2% to 30%.

High tax collection rate

According to the State budget settlement of the Ministry of Finance, in the period from 2007 to 2011, the total State budget revenue stood at 29% of GDP. Revenue from tax and fee payments alone accounted for 26.3% of GDP, and 21.6% excluding the revenue from crude oil.

The proportion of revenue from crude oil in total State budget revenue is dwindling, from 6.9% of GDP in 2007 to 3.1% in 2011. This means other revenues, particularly revenue from tax and fee payments, are increasing.

The Government has given the nod to a lot of tax reductions and exemptions in a bid to stimulate the aggregated demand, yet tax and fee payments have shown no sign of reducing, staying at 22.6% and 24.4% of GDP in 2010 and 2011 respectively.

The NA economic committee warned the high ratio of tax-fee payment to GDP had limited the ability to accumulate, hindered investment, development, and improvement of private sector?s competitiveness and encouraged fraud and corruption.

The Saigon Times Daily

Source: http://www.saigonmoney.com/2012/08/14/burdened-with-taxes-and-fees/

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