Reducing the Compliance Costs of Tax Procedures in Vietnam

The study undertaken in 2006 by CIEM, and funded through GTZ, estimated the amount of time that enterprises spent on undertaking the procedures for tax payment in Vietnam at the Provincial level. The study findings were aimed at measuring the total time costs of following current business taxation procedures and identifying the most time-consuming procedures. The study findings were also used to analyze possible impacts of new regulations of tax management, notably in terms of time costs faced by businesses.

The time cost for implementation of tax obligations were calculated on the procedures relating to tax number identification registration, value added tax invoices, value added tax payment, enterprise income tax payment, special sale tax payment, tax examination and inspection. These time costs were estimated on data collected from a questionnaire-based survey of 360 enterprises. The results were widely disseminated through credible stakeholders and through the media to lobby the General Tax Department for change.

Outcome Of The Research

The researchers presented the findings to the General Tax Department, through stakeholders in business and through their own research network. The research results were presented in a manner that was easily accessible to the department. The relatively large negative figures which were presented from a credible research institution meant that the Department had to take these findings seriously. What followed were a series of meetings and representations from stakeholders within the business community supported by the researchers to lobby for change. This resulted in a simplification in tax administration procedures to reduce the costs and time burdens placed on businesses.
Key Success Factors

The success of the research in achieving policy change could be attributed to a number of factors including:

• The research project was seen as important to businesses of all types at the time, and hence there was a strong demand and credible voice amongst stakeholders to take the research findings forward.
• CIEM was seen to be a credible and independent research institution amongst all stakeholders, and hence their research findings carried weight.
• The use of relatively simple research techniques meant that the methodology and findings had credibility, was easy to understand and could be discussed openly with all involved.
• The advocacy component of the research clearly identified winners and losers of the proposed reform, and developed strategies to mitigate those that would be resistant to change.
• The dissemination strategy focused on working with those stakeholders who had legitimacy and credibility, both within the public and private sector, to make change happen.