DECISION No. 201/2004/QD-TTg OF DECEMBER 6, 2004 APPROVING THE TAX SYSTEM REFORM PROGRAM TILL 2010

THE PRIME MINISTER

Pursuant to the December 25, 2001 Law on Organization of the Government;

Based on the 2001-2010 socio-economic development strategic targets;

Pursuant to the Politburo’s concluding opinions in the Party Central Committee’s Official Dispatch No. 147-TB/TW of July 16, 2004;

At the proposal of the Minister of Finance,

DECIDES:

Article 1.- To approve the tax system reform program till 2010 with the following principal contents:

1. Overall objectives: To build a reasonably-structured system of synchronous tax policies suitable to the socialist-oriented market economy, in association with the modernization of tax management in order to ensure the policy of encouraging national incomes, and financial resources in service of national industrialization and modernization; contribute to achieving social equality and justice and taking initiative in international economic integration.

2. Specific objectives and requirements:

a/ Tax, charge and fee policies (hereinafter referred collectively to as tax policies) must serve as the State’s tool for macro management and regulation of the economy, encourage resources and boost production development; encourage export, investment, technological renewal and economic restructure; ensure high and sustainable economic growth, thus contributing to stabilizing and improving the people’s life.

b/ Tax policies must fully mobilize sources of remittables into the State budget, meeting the State’s regular spending demands and ensuring partial accumulation in service of national industrialization and modernization; ensure that the annual average percentage of tax mobilization for the State budget achieve 20-21% of the GDP.

c/ Tax policies must express and create specific contents suitable to international economic integration process, and at the same time ensure the requirements of selective, definite, conditional and reasonable protectionism, raise competitiveness of the economy, promote production development and ensure the national interests.

d/ Tax policies must create an equal and fair legal environment. A single taxation system shall apply, regardless of economic sectors, domestic enterprises or foreign-invested enterprises.

e/ To step up the tax system reform along the direction of simplicity, transparency and publicity; to separate social policies from tax policies.

f/ To quickly modernize and raise the capabilities of tax-management apparatuses; to overcome negative phenomena, shortcomings and weaknesses, thus making the tax-management apparatuses clean and strong.

3. Contents of reform of the tax policy system:

a/ To promulgate new taxes on anti-dumping, anti-subsidy, anti-discriminatory treatment, environmental protection, property and land use.

In promulgation and implementation of the above-said new taxes, attention must be paid to their subjects, extent and time of application to suit the national socio-economic conditions, ensuring the stability of production, market and people’s life.

b/ To amend and supplement in a synchronous manner the existing taxes; to gradually increase the proportions of domestic revenues to suit the international economic integration process, increase directly-collected taxes and the proportion of directly-collected taxes in the total tax revenues.

c/ Contents and roadmap for reform of some major taxes:

- Value added tax (VAT): To be perfected by 2008 along the direction of reducing the numbers of tax-free commodities and services, thus creating conditions for consecutive tax calculation and deduction in different production/business stages; applying a single tax rate to ensure equity in tax obligations and simplicity in the calculation of VAT on goods and services; perfecting tax calculation methods, proceeding to determine the taxable turnover threshold so as to apply a single deduction method, suitable to international practices.

- Special consumption tax (SCT): To be perfected by 2008 along the direction of increasing SCT-liable subjects, adjusting SCT rates to suit the income-regulating and consumption-guiding objectives. To proceed to eliminate SCT exemption/reduction so as to ensure equity and equality in tax obligations and non-discrimination against home-made and import goods.

- Export and import taxes (EIT): In 2005, to submit to the National Assembly the bill on perfecting the Law on Export Tax and Import Tax along the direction of promoting export to the utmost, amending regulations on tax rates, tax calculation prices and tax payment time limits for realization of international commitments and practices; amending tax collection/payment process and procedures to suit the Customs Law, thus enhancing export/import management according to international commitments.

- Taxes on anti-dumping, anti-subsidy, and anti-discriminatory treatment are planned to be submitted by the end of 2005 to the National Assembly for promulgation.

- Enterprise income tax (EIT): To be perfected by 2008 along the direction of reducing tax rates and tax exemption/reduction subjects; applying uniform tax rates and preferences to all economic sectors to encourage investment and ensure competition equity.

- Personal income tax (PIT): The draft PIT law shall be submitted to the National Assembly for promulgation by 2007 in replacement of the existing Ordinance on Income Tax on High-Income Earners along the direction of increasing tax-liable objects and taxpayers, narrowing the gap between Vietnamese and foreign taxpayers.

- Land use tax and natural resource tax: To be perfected by 2008 along the direction of increasing the taxable objects and taxpayers.

- Environmental protection tax (EPT): The EPT bill shall be submitted to the National Assembly for passage into law by 2008 along the following direction: taxable objects shall be polluting products, goods and services; tax calculation bases shall be determined properly for each type of polluting goods and services. Revenues from EPT shall be used only for environmental protection, but not for other purposes.

- Property tax (PT): The draft PT law shall be submitted to the National Assembly for promulgation by 2008 along the direction of increasing the taxable assets to ensure equity between organizations and individuals having the rights to own and use the property.

- Charges and fees shall be rearranged along the direction of further reviewing, annulling or amending unreasonable charges or fees which cause troubles to production and people’s life. Charges collected from provision of public services shall be gradually converted into service charges, while charges of tax nature shall be converted into taxes. Uniform charge and fee rates shall apply to domestic and foreign organizations and individuals in order to ensure social justice.

4. Tax management reform contents and roadmap: To step up tax-related administrative reform, raise Vietnam’s tax management level to that of regional countries along the following directions:

a/ Comprehensively modernizing the tax management work in management methods, administrative procedures, organizational apparatuses and contingent of officials; to widely apply information technologies to raise the effectiveness and efficiency of management; to control all taxable objects and taxpayers; to minimize tax losses, ensuring the correct, full and timely collection of remittables into the State budget.

b/ To step up administrative reforms in tax collection management in order to raise powers, responsibilities and effectiveness of tax management apparatuses. The draft Tax Management Law shall be submitted to the National Assembly for promulgation by 2006 in order to define clearly obligations and responsibilities of taxpayers, tax offices and other relevant organizations and individuals; to add tax offices’ rights to coerce taxes and investigate tax-related violations. As from 2007, to apply tax self-declaration and self-payment mechanism nationwide.

c/ To propagate and educate on taxes in various forms in order to raise taxpayers’ sense of consciousness in law observance; to encourage and strongly develop tax consultancy and accounting services; to increase taxpayers by declaration method. As from 2005, to apply the form of tax support services to all taxpayers nationwide.

d/ To apply modern informatics technologies to tax management: In the 2005-2008 period networks among tax offices, customs offices, treasuries, enterprises and relevant agencies shall be connected; to build an applied program in support of tax-related inspection and examination; to provide support services to taxpayers; to build a program on applied tax management according to the mechanism of tax self-declaration and self-payment by taxpayers; to build an applied program on management of personal income tax.

In the 2009-2010 period, to consolidate the established programs, expand computer connection to all concerned organizations and individuals in service of tax management.

e/ To increase collection authorization applicable to several revenues of income-paying agencies and organizations, avoiding under-collection.

f/ To intensify training and fostering to raise the administering capabilities, professional qualifications and ethical qualities of tax officers along the direction of specialization and profession.

g/ To raise the quality and efficiency of tax-related inspection and examination in order to preclude, detect and handle in time tax-legislation violations.

5. Implementation solutions:

a/ To enhance the direct and regular leadership and direction by the Party, the National Assembly, the Government, ministries, branches and local administrations at all levels in all aspects of the tax domain and tax system reform.

b/ The mass media agencies and the national educational system shall have to step up the propagation and education on tax policies so that all organizations and individuals can well understand and consciously observe tax legislation. To commend organizations and individuals that have well fulfilled their tax obligations, while strongly criticize tax-legislation violations.

c/ To synchronously perfect and reform mechanisms and policies on management of land, non-cash payment, business registration, export, import, exit, entry, accounting, price, etc. in order to create favorable conditions for tax management and tax system reforms.

d/ To enhance responsibilities of organizations and individuals in coordinating with tax offices in information provision, investigation and handling of violations, settlement of complaints and denunciations and other administrative measures in order to raise the effectiveness and efficiency of tax legislation.

e/ To encourage and step up activities of providing consultancy and services in tax, accounting, audit and tax agency in order to help tax-paying organizations and individuals better understand law provisions on tax, well conduct accounting and fulfill their obligations and responsibilities.

f/ To consolidate tax apparatuses along the direction of managing according to their functions, enhancing responsibilities and powers of tax offices of all levels.

g/ To enhance training and fostering to raise the qualifications of tax officers along the direction of profession and specialization, meeting the requirements of advanced and modern tax management.

h/ Tax policies shall be prescribed and legally valid only in legal documents on tax.

Article 2.- To assign the Ministry of Finance to assume the prime responsibility for, and coordinate with the ministries, ministerial-level agencies, Government-attached agencies and provincial/municipal People’s Committees in, implementing the tax system reform program till 2010 mentioned in this Decision.

Article 3.- This Decision takes effect 15 days after its publication in the Official Gazette.

Article 4.- The ministers, the heads of the ministerial-level agencies, the heads of the Government-attached agencies and the presidents of the provincial/municipal People’s Committees shall have to implement this Decision.

Prime Minister
PHAN VAN KHAI