Country Rankings - Vietnam
Aug 17, 2015 Vietnam: you scratch my back...Speaking of the CIVETS grouping (which, in case you didn't know, stands for Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa), Vietnam made the news recently as a result of recent reforms to tax administration procedures, which business taxpayers really rather like, according to a survey by the Government and the Vietnam Chamber of Commerce. These changes are designed to substantially reduce the amount of time and money that firms spend on filing their tax returns and paying their taxes, which can only be a good thing, can't it? But a quite startling finding was also published as part of the survey result: one-third of the businesses questioned felt the need to give their contacts at the tax department an extra little something for themselves in order to avoid being "discriminated" against. Although it was quite shocking to see this finding as part of an otherwise mundane survey, it's not really all that surprising. According to the Heritage Foundation, corruption is rife at all levels of the Vietnamese Government and judiciary, and "factionalism, bureaucratic rivalries, nepotism, and a lack of accountability" in the ruling Communist Party ensure that many agencies are run as fiefdoms, perpetuating a culture of backhanders. No doubt foreign investors operating in Vietnam and other states where bribery is accepted see the practice as just an extra tax, and perhaps a small price to pay to ensure that everything runs smoothly. Still, thirty years have passed since the Communist Government embarked on its "doi moi" economic liberalization plan, and progress seems slow. I find it hard to see how Vietnam will fulfil the economic potential suggested by its CIVETS accreditation unless there is a drastic change in the culture of government. But before that can happen there probably needs to be a change of government.
Jan 08, 2015 Vietnam: anti-consumerVietnam seems to be coming to terms with Uber in a way which will allow tax to be collected on its operations while legacy taxi firms receive some benefit from the revenues they are losing. I'm not quite sure whether this deserves approbation or censure. As with other mold-breaking Internet-based developments, entrenched monopolies, whether they be established taxi firms or central banks, are threatened by such new phenomena, which work outside conventional legal and tax structures, to the benefit of consumers and individuals. Reacting by banning or taxing them is not pro-consumer, and to that extent, Vietnam's efforts to muzzle Uber's operations even before it gets off the ground in the country are reprehensible. So they get an Execration. Uber's tax structures are indeed complex, and its critics, such as Margaret Hodge, UK Labour Chair of Parliament's Public Accounts Committee, use its fiscal vulnerability as a stick with which to beat the company, although their underlying agenda may have more to do with the defense of existing employment-heavy monopolies. Uber's drivers are self-employed, but unlike most mini-cab drivers are paid out of Uber's credit-card receipts, making it difficult if not impossible for them to cheat the tax-man. The balance of Uber's receipts appear to be divided between national or regional licensed operators and international holding structures, and that's perhaps where there is a chance for BEPS-style tax avoidance, although no-one is suggesting that there is anything illegal as such about Uber's structure. The biggest danger to Uber from a tax perspective may be that its drivers could be classified as employees, and tax authorities the world over are probably exploring their chances of following that route. At first blush, it would seem unpromising: a driver, paying all her maintenance and running expenses, and free to work for any licensed operator (that may be Uber's weakness) seems to be a classic case of self-employment. At all events, one supposes that Uber's lawyers have crawled all over their driver contracts with that in mind. For Uber's enemies, and there are plenty, the licensing aspect seems more promising ground, and many countries have seen partial or total bans on Uber operations, sometimes as a result of court action taken by taxi operators' associations, and sometimes through direct action by governments. The grounds for such bans are extremely murky, and in many cases there would seem to be a large element of hysteria, whipped up by existing operators. This court activity will run and run, presumably reaching constitutional courts in many cases. Countries taking direct administrative action against Uber (execrations for all of them) include Australia, France, India, South Korea, Spain and Thailand. Government should get out of the way, stop interfering with individuals' freedoms to operate and use motor cars for hire, and concentrate on ensuring a fair and conclusive legal process. There can hardly be a person on the planet who thinks that traditional licensed taxi-drivers are anything other than a conspiracy against the public. Except the taxi-drivers themselves, of course.
Sep 18, 2014 Vietnam: dumpedAccording to the World Trade Organization's definition, "dumping" occurs "when goods are exported at a price less than their normal value, generally meaning they are exported for less than they are sold in the domestic market or third-country markets, or at less than production cost." If a country feels that a domestic industry is under threat because it can't compete with foreign products dumped into its market, then it is within its rights under world trade rules to slap anti-dumping taxes on the offending imports to even up the competitive playing field, as Vietnam has just done for the first time on steel products from China and other countries in the region. Fair enough you might say. A Government that stood by and watched an industry crumble without intervening in some way wouldn't be in power for very long. Except that I find the whole concept of "dumping" quite mystifying. In this case it implies whole industries across national boundaries have conspired to drive Vietnam's steel makers out of business. I find that very hard to believe. And companies that sold their products at below-cost prices for a sustained period of time aren't going to be in business for very long. Isn't the whole purpose of the framework of world trade rules supposed to reward the most efficient producers and drive down prices? Vietnam is by no means the only country to have resorted to anti-dumping taxes recently; the European Union and the United States are among the worst offenders. But ultimately the ones that lose out as a result of anti-dumping duties are consumers who have to pay higher prices for goods.
Jun 27, 2013 Vietnam: cuts taxWhile Rome burns, Cameron castigates and the G8 goes wool-gathering, in a more business-like part of the world governments continue to reduce corporate taxes, this week specifically in Vietnam, which is heading for a 20 percent rate by 2016. To be fair to Mr Cameron, this will only be the same as in the UK. Vietnam doesn't shine as a beacon of democracy or liberalism, remaining, like China, a one-party state, but it is now relentlessly capitalist. Anyway, that's not why the 20 percent rate is so interesting: 20 percent, which is less than half the individual tax rate for most reasonably well-off individuals in most parts of the world, is getting intruigingly close to zero, and that is where it will end up, in the foreseeable future. Putting the AFTICs out of business? That's a tough call to make. They will have had plenty of time by then to assemble a critical mass of capital and professional competence, and will be much nicer places to live than densely populated capitals such as Beijing, Paris, Sao Paolo or Toronto, and for the most part warmer as well. That's if you are allowed to live there – most of them have fairly high barriers to entry for individuals. And that's an issue for them, since if they want to fight the established centers on equal terms, they will have to attract large numbers of professionals, and they are mostly too small to do that successfully without becoming uncomfortably over-crowded.
Dec 20, 2012 Vietnam: wields the tax knife againJust a couple of weeks ago I was rewarding Vietnam for cutting personal income tax rates; now the country gets another star for listening to business and cutting corporate income tax rates in a package which is heavily slanted towards encouraging SMEs. True, the headline rate at 23% (20% for SMEs) will be no lower than the UK's after the cuts, but Vietnam is in competition with surrounding countries such as China (headline 25%), South Korea (24.2%) and Thailand (23%, falling to 20% next year). I bet tax revenue increases as a result.
Dec 06, 2012 Vietnam: making quiet progressPopular Western perceptions of Vietnam are so dominated by memories and images such as Kent State, the ride of the Valkyries and My Lai, at least mine are, that it's hard to focus on a more up-to-date vision of the country. Perhaps it's an age thing; younger people may be more aware that Vietnam is an Asia-Pacific success story, joining the WTO five years ago, clocking up a monotonous 7% growth every year, and very prominent in trade treaty negotiations. It is taking a full role in regional development within the Association of Southeast Asian Nations (ASEAN), which is expected to lead to the introduction of the ASEAN Economic Community by 2015. In addition, Vietnam is currently negotiating an extension of the Trans-Pacific Partnership trade treaty with the US and a free trade agreement with the European Union, and has ongoing talks with Russia and Singapore. However it's Vietnam's increase in income tax threshholds, taking 75% of tax-payers out of the tax net that gets it an award this week.
Aug 09, 2012 Vietnam: knows where its bread should be butteredIt's good that Vietnam is dishing out some tax exemptions and reductions, and quite rightly these are mostly directed at SMEs. It's lucky for small Vietnamese that they're not in the EU, where such largesse would of course be banned as illegitimate State Aid. ASEAN hasn't yet developed the powers and excrescenses that litter the sidewalks of Brussels, and let's hope it never does, although I'm perfectly certain that, as I write, in some back room at the egalitarian OECD, a bearded (male) economist is drawing up rules to prohibit all discriminatory incentives to SMEs. ASEAN itself is still mostly a pro-trade organization (like the EU before it got carried away with Delorsian delusions of empire) and Vietnam is building on the existing trading treaty by negotiating an FTA with South Korea, another member, which therefore receives the week's second encomium.