Vietnam to rank businesses' tax performance to focus on evaders

Thanh Nien News

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A file photo of people submitting taxes at Ho Chi Minh City's tax department. Photo: Kha Hoa A file photo of people submitting taxes at Ho Chi Minh City's tax department. Photo: Kha Hoa

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Tax authorities have announced a set of proposed criteria for ranking businesses in terms of tax compliance, a precursor to shifting the focus to evaders.
The 10 criteria for categorizing a business' performance as "low" include failure to declare and pay at least a third of payable taxes within 12 months and posting accumulated losses equivalent to more than 150 percent of capital, Vietnam News Agency reported.
To achieve a "good" ranking, a business will have to satisfy nine criteria such as paying taxes fully and in time and not getting tax-related fines of more than VND50 million within two years, it said.
Speaking at a meeting with businesses Thursday to collect their feedback to the ranking system, Dang Ngoc Minh, deputy chief of the General Department of Taxation, said it is part of efforts to make tax management more efficient through risk management.
Dau Anh Tuan, who is in charge of legal issues at the Vietnam Chamber of Commerce and Industry, called the proposal "necessary" saying it is "unfair" that law-abiding businesses now suffer similar inspections as violators.
Businesses rated as good would undergo less scrutiny and red tape once the new system is in place, he said.
But some businesses attending the meeting expressed doubts despite agreeing such a system is needed and is becoming popular in many countries.
Nguyen Thi Cuc, chairwoman of the Vietnam Tax Consultants Association, said some of the criteria for good performance can never be met.
One of them requires, for instance, businesses to achieve a higher ratio of value added tax to capital than their peers in the same sector.
This is "unachievable" because exporters are not subject to value added tax, Cuc pointed out.
If the tax authorities apply the recommended criteria, almost every business would get a low rating, she said.

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