10
which recommends that SMEs are enterprises
that have annual turnover less than VND 100
billion. Thus, according to this criterion, the
number of SMEs will account 95.2% of the total
number of enterprises (increase 9% compared
to the number of SMEs with turnover less
than VND 20 billion); the amount of income
tax imposed on these enterprises will be VND
8,710 billion (increase VND 5,964 billion dong
compared to the amount of income tax imposed
on enterprises with less than VND 20 billion
turnover ) and the reduction of State budget
revenue will be VND 1,500 billion/year relevant
to the tax rate 17%.
Secondly,
it is recommended to continue
improvement of indirect tax policies towards
SMEs
For the VAT
It is essential to apply a normal tax rate in
addition to the special rate 0%. In the short-
term, the application of tax rate 5% is the best
measure to stimulate consumption and promote
development of SMEs. In the long-term, VAT
rate should be based on the basic principle of
tax law is the simplification of tax rates, keeping
reasonable tax revenue and creating equality
between enterprises.
It is additionally applied a VAT method to
avoid confusion or overlap. Specifically, direct
taxation should be avoided as this is not the
appropriate taxation method in estimating and
collecting tax in practice. Most of the enterprises
that are applying this tax method do not perform
well their accounting and invoicing regimes.
Therefore, in practice, tax agencies usually
calculate VAT by means of imposing VAT rate or
turnover. The identification of high VAT makes
the practical VAT payments of enterprises face
various difficulties, hence, they tend to declare
lower turnover than practice to evade tax.
It is also necessary to build a simpler and more
flexible tax declaration mechanism for SMEs.
The Government should modify the Law on VAT
to harmonize with other laws and create more
effective legal framework for SMEs operation.
For Special Consumption Tax and Export – Import
Duty
Special Consumption Tax is an indirect tax
imposed on specific taxable goods and services
regulated in the Lawon Special Consumption Tax.
Reduction of Special Consumption Tax impacts
substantially on prices and facilitate SMEs as they
reduce prices, discharge inventories and improve
competitiveness. Reduction of Export and Import
Duty facilitates SMEs in reducing input costs,
technology and material costs and, as a result,
lower selling prices and release inventories. It
is recommended that Special Consumption Tax
and Export and Import Duty should be imposed
specifically on SMEs but not imposed by business
industries. Adjustment of export and import
tariffs should also be applied to meet practical
situation of enterprises.
Thirdly,
administration procedure for taxation
should be renovated; communication and support
to taxpayers should also be applied.
It is needed to revise and remove complicated
procedure for taxation causing difficulties for
enterprises.Adefinite anddetailed administrative
reform routine should be built to meet the
development requirement of enterprises and
economy. Simultaneously, tax declaration and
payment mechanism should also be reformed to
meet characteristics of SMEs, facilitate businesses
and fight against tax.
In addition, communication and education
campaigns, tax declaration and tax registration
mechanisms should be implemented in different
forms to improve tax compliance behavior of
taxpayers such as newspapers, broadcasting,
and internet portal…, to provide entrepreneurs
with necessary information of tax and tax duties.
Frequent dialogues should also be organized to
improve interaction with taxpayers according to
regulations.
References:
1. The Resolution No. 35/NQ-CP dated May 16
th
of the Government on
enterprise support and development by 2020;
2. The Law No. 106/2016/QH13 dated April 6
th
2016 modified and
supplemented provisions of the Value Added Tax Law;
3. The Law on SMEs Tax Support No. 04/2017/QH14 dated June 12
nd
2017;
4. Assoc. Prof. Dr. Nguyen Truong Son (2015), “The development of SMEs
in Vietnam”, National Political Publishing House, Hanoi;
5. Le Anh Van, “Renovation of SMEs support policies to improve
competitiveness”, Conference Proceeding “Competition strategy of
SMEs” dated January 16
th
, 2017;
6. Finance and Accounting Studies Journal.
