Business Beat

Business Beat

Tax reforms: businesses call it like they see it

Rather than act in haste and then repent at leisure, authorities are holding sessions with local businesses to get their opinions on proposed amendments to tax laws. and they got more than a earful of comments. Last week, during one such session, when businesspeople were invited to speak their minds, they said planned changes to the VAT regime did not address its anomalies.

one business owner gave an example. He bought a shipment of goods worth VND600,000 and paid VND100,000 to transport his goods to HCM City. After he sold it for VND710,000, he has to pay 10 per cent VAT on had profit of VND10,000. However, tax officials told him to pay VAT on VND110,000 because he did not have a receipt for the transportation. The truth is, transport companies pay a lump sum as tax and are unable to issue individual invoices. The taxmen admitted this was unfair but had no clue about how to resolve it.

Company managers said they were reluctant to buy from farmers being unsure if they would get tax refunds. They said the regulation that unprocessed farm produce would not be subject to VAT might not benefit farmers. For, companies buying farm produce are still subject to a 10 per cent tax; and, unable to get refunds, they would pass the cost back to farmers by demanding lower prices.

Understandably, companies want corporate tax rate, which is now 35 per cent, to be even lower than the proposed 28 per cent. This might be wishful thinking because the Ministry of Finance has had to argue long and hard to lower the rate even to this level. The Standing Committee of the National Assembly wants the rate to be 30 per cent.

The amendments will have to go through the National Assembly and will be applied from early next year.

Thronging for a licence

News from the HCM City Department of Planning and Investment to register new businesses is mixed. While it is good that more and more people are seeking to register, the bad news is that the department is ill-equipped to cope with the thronging crowds.

Hundreds of people arrive every morning to submit their applications. Those who come after 9 am might have to return empty-handed because every day the department can only process 160 applicants. Therefore, it decided to issue waiting slips with numbers and an estimated time for processing the application, luring the crowds early in the morning to get the slips.

Department director Nguyen Huu Tin told the press that he had asked for more personnel to ease the workload. More desks have been added and Tin said he was readying another area to have more space to process applications. Despite the much-publicised on-line registration, fewer than 40 per cent of applicants use the Internet to register their business. Maybe they are worried their applications would get lost in cyberspace.

Software firm gets special State treatment

In a breakthrough in the Government’s struggle to overturn the telecoms monopoly, it has allowed two software parks in HCM City and Da Nang to hook-up to the Internet via satellite earth stations.

In fact, the HCM City-based Sai Gon Software Park SSP has been eyeing this type of connection for several months now. Before choosing this particular technology, SSP leased a dedicated line from Viet Nam Posts and Telecommunications Corporation VNPT for US$37,000 a month but was not satisfied with the quality and bandwidth. It then decided to test US-based CyberStar’s satellite connection at just $7,000 a month. After being fully satisfied, SSP informed the Government and VNPT of the trials and sought permission for a permanent satellite deal.

Of course, VNPT was less-than-thrilled and the Ministry of Posts and Telematics forbade SSP from going ahead before the Government stepped in.

With the Government’s backing for SSP’s bold move, people hope for more breakthroughs that will make VNPT more customer-oriented and competitive.

Road project cops stick

After doing a rough budget for widening the streets leading from the Tan Son Nhat International Airport to the city’s downtown area, the HCM City Department of Transportation and Public Works came up with the incongruous figure of VND2,000 billion US$130 million.

Considering just 3.5km of streets were to be upgraded, the estimate affronted the public. The local press, for its part, was suggesting other options, variously calling the widening unnecessary and costly.

Following a meeting of the city People’s Council last week, the department downed its estimate to VND800 billion $51 million, confessing to calculation errors. Its chief Ha Van Dung said the earlier estimate was not the department’s official estimate, and that the contracted consultants had factored in eviction costs based on precedents from other similar projects. They were merely miscalculations and not a scheme to siphon off State money, he said plaintively.

However, despite the new estimate, popular opinion is that the project is unnecessary because of traffic bottlenecks along the streets’ numerous intersections. The wider these streets become, the more congested they would get, and hence more traffic jams, people argue. Some suggest cheaper alternatives like building overpasses or making streets one-way.

VNN