Petty bribery: It’s not pretty

By Nguyen Hang, Thanh Nien News

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Reducing tax procedures will not only save time and costs for companies but also help curb petty corruption and enhance Vietnam's business environment. Photo: Ngoc Thang 
Minister of Finance Dinh Tien Dung has heard from numerous enterprises and residents who complained of having to pay small bribes to tax officers to complete their payments.
“Taxpayers have to go to tax agencies many times and bribe officers to ‘be allowed’ to finalize the payments,” Dung said at a meeting in Hanoi last week.
The main factor that helps tax officers easily demand bribes is Vietnam’s complicated tax procedures.
Firms in Vietnam spend an average of 872 hours a year filing, preparing and paying taxes--32 times annually.
Taxes in Vietnam eat up an average of 35.2 percent of profits, according to a World Bank report released in late 2013.
On top of that, enterprises in Vietnam make four value-added tax payments per year while those operating in neighboring Thailand make just one.
Globally, Vietnam stands 149th in the ranking of 189 economies on the ease of paying taxes, the Washington-based bank said in its report.
Faced with a heavy compliance burden, many companies opt to evade taxes. This results in huge losses for the state budget.
Some businesses “shake hands” with tax auditors who agree to ignore tax evasion in exchange for handsome bribes. Other firms, especially foreign corporations, engage in profit shifting to avoid taxes by overstating the costs of materials imported from subsidiaries abroad and understating export values.
In other words, many foreign firms get overcharged for equipment and inputs by their parent companies who then buy their products and services at very low prices. In this way, they manufacture losses on paper.
The administrative burden of tax compliance also badly affects Vietnam’s business environment and competitiveness. We are trying to attract foreign investment. But what can we tell investors about complicated tax procedures that cost each firm 100 working days per year? What can we say about corrupt tax officers?
Reducing tax procedures will not only save time and costs for companies but also help curb petty corruption.
Minister of Finance Dinh Tien Dung, who said it now takes 537 hours a year for firms to deal with tax payments, pledged with Prime Minister Nguyen Tan Dung on July 9 that he would cut the time to 337 hours a year by the end of 2014.
For now, we can only hope that when tax procedures are slashed, corruption will likewise fall.

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