Vietnam loses VND 50,000 billion per year because of tax incentives

According to Oxfam’s calculations, because of prolonged tax incentives, Vietnam has lost 50,000 billion dong a year, enough to build 25 hospitals with 1,000 beds.

Vietnam should eliminate tax incentives as one of the recommendations of Johan Langerock, Oxfam’s tax policy expert at Vietnam Finance and Development Policy Forum 2019 on the morning of November 13. Oxfam is a non-governmental organization working in the areas of rural development, risk reduction, climate change and disaster response, civil society development and ethnic minority communities.

This expert cited OECD data showing that tax incentives for businesses in Vietnam are equivalent to a loss of 1% of GDP. This corresponds to a loss of about VND 50,000 billion per year – the amount he thinks is enough to build 25 new 1,000-bed hospitals.

“As tax revenues from large companies decline, the pressure to pay the VAT of ordinary people will increase or public services such as health or education will be cut. Oxfam believes that Vietnam can eliminate it.” tax incentives without compromising national growth or competitiveness, “the expert said.

Tax incentives such as corporate tax rates, import duty exemptions, value-added tax (VAT) reductions, and personal income tax exemptions are seen as a way to attract investment by Vietnam and many other countries. foreign.

According to Mr. Johan Langerock, this is not only a problem at the national level like Vietnam but there is a fierce race to the bottom of taxes for businesses in ASEAN.

“ASEAN companies have been paying lower and lower tax rates over the past decade. In such a business environment, large companies with wealthy shareholders are getting more and more benefits, while services Essential tasks for ordinary people have not been properly invested and developed, “said Oxfam’s expert.

In addition to eliminating a number of tax incentives, the second recommendation Oxfam sent to Vietnam as ASEAN chair in 2020 is to add the issue of tax competition and tax incentives to ASEAN’s agenda to raise awareness. inform and initiate regional level discussions.

Raising views on these issues later, Mr. Nguyen Van Phung, Director of the Department of Big Business Tax Administration (General Department of Taxation), said that the tax incentives for the past 10 years have dropped sharply, the adjustments are based on previous tax incentives reviews.

And Mr. Nguyen Duc Thanh, Director of the Institute for Economic and Policy Research, asked: “If 10-20 years ago did these incentives not exist, would any businesses invest in Vietnam? And if they did not If Vietnam can achieve the current economic targets “

Therefore, Mr. Thanh said that the issue of tax incentives will have two sides. One of them is to reduce the budget revenue, but also the opportunity cost because without incentives, it will not attract investors and it will be difficult for Vietnam to reach its growth targets and reduce unemployment.

In order to increase budget revenue, besides solutions on spending and tax management, Master Ho Ngoc Tu, Public Policy Department, Institute of Strategy and Financial Policy, Ministry of Finance mentioned property tax. The tax has not yet been applied, he said, resulting in a part of potential revenue being overlooked and high-income earners, who have many assets that are not tax burdened.

“The research to apply the current property tax is absolutely right to increase revenue for the state budget and ensure fairness in tax administration. This is a progressive tax, ie the more having more properties as real estate will pay more in taxes, “the expert said.
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