REVIEW
of
FINANCE -
November, 2018
5
provisions in the current law are no longer in line
with the commitments made under the new FTA
or have not met the requirements of the socio-
economic development of the country that were
the objectives of the administrative reform, and
reduction of problems to improve the legality of
tax regulations. In addition, some regulations in
corporate income tax were not in line with tax
policy that applied to state-owned enterprises
(Thanh, 2016).
Tax administration was slow in issuing
legal documents to implement tax laws. There
were shortages in coordination between tax
administration system, the General Department
of Taxation (GDT) to other agencies of Ministry
of Finance and between Ministry of Finance with
other ministries. They did not apply information
technology in tax administration. The capacity
of tax officers in all 3 levels of government were
considered not adapted to the requirements. There
were many negative activities on imposing tax
on imports and exports services.In many cases,
tax services quality was not good, even bribery
and corruption still appears quite frequently,
esspeciallyin the informal sector (VCCI, 2016).
Transparency and accountability is still a big issues
in tax administration, and this was raised at the
Parliament’ meetings and media (D. Tuan, 2018).
In general, tax reform has always been a big
struggle in any country and at any time because
tax is related to division of power and political
interests. Political power refers to those who
decide who can get what and how. “The political
challenges of tax reformhave been obvious to those
with a casual interest in contemporary politics
because, irrespective of the country concerned, tax
policy has never been far from the political agenda
in recent years” (Eccleston, 2007). Increasing or
decreasing taxes are policy priorities of politicians.
It is also a major policy during the election process
and between political opponents with each other.
In Vietnam, with one party system, the Communist
Party of Vietnam discusses, decides and leads in
comprehensive socio-economic issues including
tax policies. It is not similar in the way political
leaders in western countries make public pledges
to introduce or not introduce new taxes.
Besides, increasing or decreasing taxes are
dependent on the socio-economic situation in
different periods. Before the years of 2000, Vietnam
attracted FDI by reducing tax on land use and
corporation income tax for foreigner investors.
From 2000 to 2010, Vietnam government set up
priorities for state-owned enterprises - which
ended up tobe ineffective. The poor performance
of the state enterprises has continued thus many
managers and directors of the State Owned
Enterprises (SOEs) standing trial for corruption. To
solve mismanagement problems, the government
established the State Capital Management
Committee for enterprises earlier of this year (D.
Tuan, 2018).
Tax reform is bound to face many obstacles
as it touches on the interests of many different
groups. It is not easy to get somebody else’s
benefit without causing a reaction or opposition.
Political commitment is important, but it is more
important to gain social support on the basis of
clearer or more visible benefits that tax reform
brings. Resource constraints such as information,
people, finance or technology will also affect the
progress of tax reforms in a way that inhibits or
promotes (D. T. A. Tuan, 2010).
One of the biggest challenges is the fact
that the economic institution reform has not
clearly defined the target, stopping at the “stone
detection across the river”. Government outlined
many action plans for economic institution reform
from restructuring economy, public investment,
public debt, state owned enterprise, tax policy
and administration. However, it is only raising the
issues and finds it hard to change into a market
economy with full meaning in a one party system.
Thus they are very prudent. This leads to revising
and adjusting tax laws over many years. They are
all under the leadership of the Party and it is blind
to the Party’ principles and regulations.
The issue of double objectives for both steady
macroeconomic, fast growth and revenue for rising
spending also rises up problems. In Vietnam’s
2011-2020 SEDS highlights the need for structural
reforms, environmental sustainability, social
equity and emerging issues of macroeconomic
stability. The SEDP for 2016-2020, acknowledges
the slow progress on certain policy priorities
and emphasizes the need to accelerate reforms
(Government, 2011).
Additionally, reforming the tax system to
