For the tentative criteria, enterprises would be divided into good, average and low groups in terms of tax law compliance, with different management measures applying to each group.

Companies classified as good should meet nine criteria and 15 indexes relating to observance of tax regulations, obligation fulfillment and payable taxes to equity, and average revenue of the sectors in which enterprises operate.

Businesses that do not meet one of the criteria and 10 indexes would be put in the low compliance group. The remaining group would consist of companies that do not meet nine criteria of good compliance and do not have any one of the low compliance errors.

However, Phan Thuy Tuong Vi, a lecturer at the University of Economics and Law under the Vietnam National University HCMC, stressed the urgent need to consider the legality and impact of the criteria as enterprises now have to struggle with many tax regulations.

The tax authority said enterprises would be prioritized for value-added tax (VAT) refunds if they are classified as good. But Vi asked whether enterprises could get priority for VAT refunds if they meet all the conditions for VAT refunds under the VAT Law and the Law on Tax Management but are rated as low in terms of tax law compliance by the tax authority.

Tran Duc Thinh from the association of science, technology and management advisory said the evaluation of corporate tax payers should fall in line with relevant laws and the actual business environment.

Meanwhile, businesses bemoaned that it is irrational to classify an enterprise as good or not based on the ratio of tax payments to equity.

Nguyen Khanh Toan, head of the Risk Management Department at the General Department of Taxation, said the criteria for assessing tax law compliance of enterprises is a management technique applied internally by tax agencies. However, as the criteria impact businesses, tax authorities should gather comments to improve the draft criteria.

The criteria would be piloted in certain provinces for the tax authority to assess their viability and make adjustments before they are applied nationwide.

Toan noted the most important thing is to determine the precise criteria for assessing and classifying corporate tax payers; otherwise, the criteria could cause risks for them.

Phan Duc Hieu, vice president of the Central Institute of Economic Management (CIEM), shared enterprises’ worries, saying the agency responsible for drafting the criteria should listen to enterprises to avoid leaving any negative impact.

City tax agency to monitor big enterprises

* Enterprises which were formed in HCMC after October 10, 2015 and had chartered capital of at least VND100 billion (US$4.48 million) will be put under the management of the municipal Department of Tax instead of district-level tax offices.

The change is in line with a recent decision issued by the HCMC government. The department will manage enterprises with State holding and foreign stakes exceeding 30%, build-operate-transfer (BOT) or build-transfer (BT) firms, and those under the authorities of industrial parks, export processing zones and hi-tech parks including Quang Trung Software City.

The department will be responsible for enterprises whose main operations involve coal, crude oil, natural gas, iron ore and precious metal exploitation; passenger transport on coastal routes; finance, investment fund and insurance sectors; and lottery and gambling activities. The agency will manage manufacturing and exporting firms which often get value-added-tax refunds.

The department will be in charge of the enterprises until December 31, 2016. After that, management will be implemented as directed by the Ministry of Finance.

The HCMC government’s decision came out after the municipal People’s Council issued a resolution on duties of tax authorities for new enterprises in the city as specified in the ministry’s Circular No. 127/2015/TT-BTC.

The ministry’s circular aims to make tax regulations and adjustments compatible with the 2014 laws on investment and enterprise and the Government’s Resolution 19 on improving the national competitiveness via support for startups.

Source: Saigon Times