Vietnam’s tax regime is complex and burdensome, write Brian and Kimberly Vierra in ‘Vietnam Business Guide: Getting started in tomorrow’s market today’ (www.wiley.com). Preferential tax arrangements are sometimes offered at the central, municipal, or the industrial-zone level, with the tax authorities having considerable discretion to grant such incentives on a case-by-case basis, the authors add.
They cite a finding of the World Bank – that Vietnam’s business tax processes are more arduous than those found in other Southeast Asian countries including Malaysia, Thailand, Laos, Indonesia, and the Philippines. “In fact, of 181 countries surveyed, Vietnam was ranked 140th of 181 in terms of ease of costs of making business tax payments.”
(It may be sobering, however, to visit www.doingbusiness.org to check the latest rankings. India ranks 133rd in ‘ease of doing business,’ and 169th in ‘paying taxes.’ The numbers for Vietnam are 93 and 147, respectively.)
Early 2009 was a time of great flux in the country’s laws, the Vierras inform. For instance, prior to 2009, Vietnam did not have an inheritance tax; or a gift tax. Foreign companies operating in Vietnam are especially concerned about the changes to personal income taxation in 2009, because the treatment of fringe benefits often given to assignees is now less favourable.
The authors rue that, compared to other countries in Southeast Asia, the tax rates in Vietnam are high. “For example, if a resident employee is making $100,000 equivalent in Hong Kong or Singapore, with a family size of four, the personal income tax paid would be about $8,000 per year. In Thailand, the employee would pay about $22,600 per year in taxes whereas in Vietnam, the employee would have to pay around $27,000.”
Recommended read for the global managers and the international business consultants.
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