- Method of collecting and processing information: the authors have collected primary documents and secondary documents, including: Report on implementation results of the tax system reform strategy for the period 2010 - 2020, International tax reform reports of the IF, scientific articles, domestic and foreign news articles... are related to the issue of budget revenue structure. These documents have been processed by the authors to:
+ Systematize the results that have been studied before, discover the issues that have been agreed upon, and the gaps that need to be researched to deepen the research and find out new points of the issue.
+ Searching for scientific bases and evidence data as the basis for the formation of thesis, arguments and demonstrations both in theory and in practice.
+ Draw conclusions according to the author’s own approach.
- Analytical methods are used to analyze data related to the state budget collection structure for the period 2011-2020; analyzing a number of situations related to Viet Nam’s economy and society in the context of the digital economy and extensive international integration to see the challenges to the state budget revenue structure in the coming period.
4. RESEARCH RESULTS
In the implementation of the tax system reform strategy for the period 2011-2020 according to the Prime Minister’s Decision no. 732/QD-TTg dated May 17th, 2011, the legal system on taxes, fees, charges and other revenues managed by the tax sector has been completed in the
right direction of reform, creating change and showing positive results in revenue restructuring to ensure sustainability and fairness.
In the period 2011-2020, the average rate of mobilization into the state budget in the period 2011-2020 reached about 24.5% of GDP, of which: the period 2011-2015 reached about 23.5% of GDP (the planned target was 23-24% of GDP); the period 2016-2020 reached about 25.2% of GDP (the planned target was 23.5% of GDP), with the average growth rate of total state budget revenue in the period 2016-2020 reaching 8.6%/year, exceeded the target at the Documents of the 11th and 12th Party Congresses.
Criteria
The period 2011-2015 The period 2016-2020 Value (billion
VND) Proportion Value
(billion VND) Proportion
Total state budget revenue 4,160,948.13 6,895,754.24
Of which:
Total domestic revenue (excluding crude oil) 2,831,358.91 68.0% 5,411,445.84 78.5%
Total revenue from crude oil 538,339.14 12.9% 246,666.42 3.6%
Total revenue from selling state capital in
enterprises 238,712.25 3.5%
Total balance revenue from import and export
activities 734,862.16 17.7% 963,607.06 14.0%
Total revenue from aid 56,387.92 1.4% 35,322.66 0.5%
(Source: Author’s compilation from reports of the Ministry of Finance) The revenue structure of state budget is adjusted in the direction of increasing the proportion of domestic revenues from production and business, gradually reducing the dependence on revenue from mineral resources (crude oil) and income from import and export. This is reflected in the data on the ratio of total revenue from crude oil to total state budget revenue decreasing from 12.9% in the period 2011-2015 to 3.6% in the period 2016-2020 and the ratio of total revenue from import and export decreased from 17.7% in the period 2011-2015 to 14% in the period 2016-2020, these two reduced revenue sources were offset by domestic revenue accounting for 68% in the period 2011-2016 increasing to 78.5% in the period 2016-2020. In terms of the ratio of mobilizing each state budget revenue in total GDP, the ratio of total mobilization from taxes, fees and charges managed by the tax sector (except crude oil) has also brought positive results in the period 2016-2020 (accounting for 19.8%).
Criteria The period 2011-2015 The period 2016-2020
Total GDP (billion VND) 17,740,279 27,381,533
Ratio of total state budget revenue/GDP 23.5% 25.2%
Of which:
Ratio of total domestic revenue mobilization (excluding crude oil) 16.0% 19.8%
Ratio of total revenue from crude oil/GDP 3.0% 0.9%
Ratio of total revenue from selling state capital in enterprises/GDP 0.0% 0.9%
130 THE THIRD INTERNATIONAL CONFERENCE ON: “FINANCE AND ACCOUNTING FOR THE PROMOTION OF SUSTAINABLE...
Ratio of total balanced revenue from import and export activities/
GDP 4.1% 3.5%
Ratio of total revenue from aid /GDP 0.3% 0.1%
(Source: Author’s compilation from reports of the Ministry of Finance) Revenues managed by the tax types (except for crude oil) have been reasonably adjusted.
In which, revenue from indirect taxes increasingly occupies an important position in mobilizing resources for the state budget, the proportion of direct taxes gradually decreases in budget revenue, in order to implement the policy of rebuilding the investment and business environment to promote the development of enterprises. Specifically, the proportion of revenue from VAT in total state budget revenue decreased from 18.2% in the period 2011-2015 to 16.2% in the period 2016-2020;
The proportion of revenue from excise tax in total state budget revenue increased from 6.3% in the period 2011-2015 to 6.9% in the period 2016-2020; The proportion of revenue from environmental protection tax in total state budget revenue increased from 1.8% in the period 2011-2015 to 3.7%
in the period 2016-2020, accounting for 3.7% of the total state budget revenue. The proportion of revenue from corporate income tax in total state budget revenue decreased at the time of adjusting the CIT rate, however, the proportion of revenue tended to increase gradually from 13.6% in 2017 to 15.3% in 2020, on average in the period 2016-2020, accounted for 14.4% of the total state budget revenue, slightly lower than the average of 15.1% in the period 2011-2015; PIT tends to increase gradually due to the economic situation with good growth in recent years, from 5.6% of total state budget revenue in the period 2011-2015 to 6.7% in the period 2016-2020; the proportion of revenue for land revenues increased from 7.5% in the period 2011-2015 to 12.6% in the period 2016-2020, of which land use levy increased from 6.1% to 10.1%. Revenues from fees and charges (including registration fees) are also gradually playing an important role in mobilizing resources for the state budget. Revenues from fees and charges managed by the tax sector also play an important part in mobilizing resources for the state budget. Revenues from fees and charges increased from 3.8% in the period 2011-2015 to 4.8% in the period 2016-2020.
Criteria The period
2011-2015 Proportion The period
2016-2020 Proportion
Total domestic revenue 2,831,358.91 5,411,445.84
Tax revenues
VAT 758,717.78 26.8% 1,118,333.14 20.7%
Special Consumption Tax 262,354.63 9.3% 473,808.95 8.8%
Fuel fee (Environmental protection tax) 74,831.24 2.6% 258,562.57 4.8%
CIT 629,019.83 22.2% 991,906.43 18.3%
PIT 234,532.20 8.3% 462,993.37 8.6%
Resource Tax 44,302.86 1.6% 98,817.21 1.8%
Agricultural land use tax 329.01 0.0% 151.49 0.0%
Real estate tax (Non-agricultural land use tax) 7,170.3 0.3% 9,085.31 0.2%
Revenues from Fees and Charges
Registration fee 79,605.95 2.8% 162,338.12 3.0%
Revenues from fees and charges 77,324.38 2.7% 171,446.18 3.2%
Revenues other than fees and charges
Revenues from natural gas 38,400.19 1.4% 29,413.12 0.5%
Other revenues (03 economic sectors) 61,213.51 2.2% 29,272.07 0.5%
Revenue from lottery activities - 0.0% 127,954.59 2.4%
Revenue from granting the right to exploit
minerals, airspace, sea area 5,788.00 0.2% 27,835.26 0.5%
Capital recovery, profit after tax, difference in
revenue and expenditure of the State Bank 139,145.00 4.9% 413,994.84 7.7%
Tax on land use right transfer (debt collection) 23.67 0.0% - 0.0%
Other budget revenue 102,838.64 3.6% 166,885.83 3.1%
Fixed revenue at commune 12,301.61 0.4% 9,961.07 0.2%
Land use fees 255,544.17 9.0% 699,212.27 12.9%
Revenue from selling and renting state-owned
houses 9,112.12 0.3% 9,943.55 0.2%
Land rent 38,803.49 1.4% 149,530.48 2.8%
(Source: Author’s compilation from reports of the Ministry of Finance) In terms of sectors, the proportion of revenue from the SOE sector continues to contribute an important part but tends to decrease from 17.7% of total state budget revenue in the period 2011-2015 to 11.1% in the period 2016-2020. This trend is inevitable because the number of SOEs has recently decreased due to equitization, the operating efficiency of SOEs is not high, so the growth rate of revenue from SOEs is lower than the growth rate of state budget revenue in general.
Meanwhile, the revenue of non-state enterprises increased from 12.6% of total budget revenue in the period 2011-2015 to 15% in the period 2016-2020, thanks to preferential policies, creating favorable conditions for production and business, the number of newly established enterprises increased, the performance of the non-state economic sector also improved, so the state budget revenue from this sector also increased.
The revenue of the foreign-invested enterprise sector increased respectively in the period 2011-2015 from 12.9% to 13.7% in the period 2016-2020. The change in revenue from the foreign-invested enterprise sector is partly due to the recent increase in foreign investment capital into Viet Nam, in addition, tax authorities strengthen inspection and examination of transfer pricing to detect fraud cases and reduce losses, thus contributing to increasing state budget revenue of this area.
In general, the revenue structure of Viet Nam’s state budget over the past time has had positive changes. However, in terms of the sustainability of state budget revenue, there are still some limitations in terms of revenue scale and revenue structure, it is:
- The proportion of revenue from import-export is still high (accounting for about 14%-17%
in the period 2011-2020 of total state budget revenue). In the context of the coming period, the
132 THE THIRD INTERNATIONAL CONFERENCE ON: “FINANCE AND ACCOUNTING FOR THE PROMOTION OF SUSTAINABLE...
implementation of tax reduction according to the integration commitments puts a lot of pressure on the need to exploit revenue sources or expand the domestic revenue base to make up for the shortfall in revenue from import and export.
- The revenue structure of Viet Nam’s domestic state budget still depends a lot on stable revenue, such as: revenue from land use still accounts for a relatively high proportion of total domestic revenue (accounting for 12.9% of total revenue in the total domestic revenue in the period 2016-2020), or placing a large tax burden on enterprises due to the high proportion of corporate income tax (CIT) (accounting for 26.9% of total domestic revenue in the period 2016-2020).
- Scale of personal income tax (PIT) (accounting for 8.6% of total domestic revenue in the period 2016-2020), housing tax (accounting for 0.2% of total domestic revenue in the period 2016-2020) is still quite modest, while people’s living standards continue to improve or are not commensurate with the context of increasing real estate transactions and speculation.
- The contribution of the foreign business sector to the tax-to-GDP ratio has decreased, although their contribution to value-added has been increasing, indicating that General Department of Taxation (GDT) needs to further strengthen its international tax administration capacity.
Some reasons for the above situation are: Tax law still has limitations, not covering the activities of the economy. The area without tax collection and tax incentives is still a lot with 25 groups of goods and services that are not subject to VAT and 11 incomes that are exempt from CIT; The list of tax incentives is numerous and complicated, which can lead to unfair competition and also cause difficulties in tax collection control and management due to the need to determine tax collection and tax exemption; As well as the current regulation of only 10 types of personal income, it does not cover the income for the group of individual taxpayers.
Challenges affecting the development of tax reform strategy for the period 2021-2030 - The impact of the Covid-19 pandemic on world economic growth is serious and can be prolonged, creating risks of socio-political instability, financial-monetary balance not only in the year 2021 but can also last in the early years of the period 2021-2025, potentially leading to a financial crisis in some countries, profoundly changing the economic order, structure, global governance, and economic operations. This is a problem for both developed and developing countries when facing to come up with economic solutions that both ensure a balance between oriented growth and increase budget revenues to combat the Covid-19 storm.
- Global economic integration brings many benefits to Viet Nam, but it also entails some international tax risks such as transfer pricing, borrowing through affiliates in countries with low CIT rates, and allocating to permanent establistment/local branch and profit repatriation/
withholding at source arrangements.
- The rise of the digital economy has led to the emergence of a series of new business models that presents both opportunities and challenges for tax system reform. Opportunities include:
transactions in the digital economy tend to be paid in a non-cash form, which can enable tax authorities to mine data to check compliance; Digital platforms of intermediary businesses connecting suppliers and consumers facilitate formalized small supply economy transactions. All the issues of integration and digital economy emphasize the need to strengthen the international tax management capacity of the Vietnamese tax authorities.
- A global minimum tax rate of less than 15% has been agreed upon by the members of the OECD/G20 Inclusive Framework on BEPS to allows countries where the Parent Company’s headquarters are located the right to collect additional income tax from the Parent Company on Subsidiaries enjoying a tax rate of less than 15%. [11] Currently, Viet Nam still has a preferential tax rate of less than 15%.
5. DISCUSSION AND CONCLUSION
Stemming from the limitations of the current state budget revenue structure, in order to enhance the sustainability of state budget revenue in Viet Nam both in terms of scale and structure, it is necessary to pass the reform of the tax system, the reform of each tax in the period 2021-2030 towards ensuring fairness, efficiency, simplicity and transparency, narrowing tax distortions, along with expanding the tax base and reducing tax rates. To meet the above requirements, the reform in each tax policy is recommended as follows:
- Firstly: For value-added tax: with the development of e-commerce and cross-border digital economy, many countries have seen a sharp increase in low-value import packages or digital service transactions provided directly between foreign enterprises and domestic end consumers, the mechanism of tax collection according to the buyer does not really work because it will increase the burden of tax administration costs and the non-compliance of the end consumers group. Therefore, the law on VAT in the coming period needs to widen the threshold value for VAT and import tax exemption for low value goods (for example, the threshold of VAT-free turnover of VND 150 million) to reduce tax administration costs and tax fraud prevention, and the mechanism to collect tax from sellers for imported goods with a value below the threshold and the provision of digital services to domestic end consumers.
- Second: Regarding corporate income tax: eliminating tax-free incomes to minimize the integration of social tax policies such as tax-free income for incomes of enterprises employing 30% of the average number of employees in the year or more are disabled people, people after detoxification, people infected with the virus causing human immunodeficiency syndrome (HIV/
AIDS) or income from vocational training activities exclusively for ethnic minorities, disabled people, children in extremely difficult circumstances, objects of social evils; abolish the remaining preferential tax rates below 15% to ensure fairness in competition among enterprises in Viet Nam and prevent countries investing in Viet Nam from taxing subsidiaries that enjoy preferential tax rates of less than 15%; expanding the tax base for dividends and profits distributed to ensure fairness between investors that are businesses (determined as income exempted from tax) and investors that are individuals (determined as taxable income); regulations on the ratio of loans to assets to overcome the situation of “thin capitalization”, transfer pricing according to the solution on foreign investment orientation until 2030 in Resolution 50 of the Politburo.
- Third: Regarding excise tax: research, amend and supplement objects subject to excise tax (for example, adding soft drinks and online games to the list of excise taxable items) to guide the regulation of consumption in accordance with the shift in consumption trends in society as well as the orientation of the state (limiting childhood obesity and negative effects from online games); develop a roadmap to adjust tax increases for tobacco and alcohol products, in order
134 THE THIRD INTERNATIONAL CONFERENCE ON: “FINANCE AND ACCOUNTING FOR THE PROMOTION OF SUSTAINABLE...
to limit production and consumption and fulfill international commitments; review and research on adjustment of tax rates for a number of items to suit socio-economic conditions in the period 2021-2030; the study applies a combination of proportional tax rate and absolute tax to a number of taxable goods and services.
- Fourth: Regarding personal income tax: research and amend regulations on taxable income according to the opting-out principle, instead of the current regulations on 10 taxable incomes.
Regulations in this direction are intended to ensure the stability of applicable laws in the future in the face of fluctuations in business types and to cover revenues from the private sector and the informal economy.
- Fifth: Regarding international taxation, Viet Nam has become the 100th member of the OECD/
G20 Inclusive Framework on BEPS (IF) since June 2017. Accordingly, Viet Nam commits to implement 4 minimum standards out of a total of 15 BEPS Actions/Groups of solution; while the remaining 11 Actions are now arbitrary. Viet Nam has also applied the recommendations of BEPS/
Actions 4, 8 and 10 related to transfer pricing to include in the domestic law in Decree no. 20/2017/
ND-CP and currently in Decree no. 132/2020/ND-CP. Therefore, Viet Nam needs to take one more BEPS action by participating in the signing of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) to overcome the gaps and inadequacies in many bilateral taxation Agreements that Viet Nam has signed (Action 15).
In addition, in the overall strategy to reform the tax system for the period 2021-2030, the tax sector focuses on working with the Ministry of Finance and the whole country to strengthen administrative reform and improve the business environment... By 2030, Viet Nam’s business environment is expected to be ranked among the top 30 countries (according to the World Bank’s report). At the same time, quickly build a modern administrative system, based on a contingent of cadres, civil servants and public employees with high professionalism, creative capacity, good moral qualities, political bravery, serving people and businesses; implement state management methods and tools mainly by indirect regulation, strengthening post-inspection; minimize legal risks and compliance costs for people and businesses.
In order to accomplish the above goals, in addition to continuing to review and cut unnecessary administrative procedures, the tax sector needs to strengthen the application of modern technology in management, ensuring the simplest and easiest electronic tax declaration and payment. Striving to 2022, 100% of tax administrative procedures will be carried out electronically, connected to the national online public service portal at level 4 and raised to a higher level in the following years.
Along with that, the tax sector also needs to complete the connection of automatic tax administration information with state management agencies, by 2025 at the latest; complete the full, accurate and centralized taxpayer database; actively participate in international tax cooperation activities. In particular, it is necessary to study and apply modern and advanced revenue forecasting methods in the world to improve the quality of analysis and forecast of Viet Nam’s budget revenue.
Thus, in the immediate future, we still have a long way and many challenges to ensure the sustainability of state budget revenue, but we must step by step and make efforts to quickly reach the destination and focus on sustainability state budget revenue for tax revenues.
REFERENCES
1. Hồ Ngọc Tú (2019), Thực trạng ngân sách nhà nước và một số kiến nghị, Website Tạp chí Ngân hàng tháng 7/2020;
2. Trương Bá Tuấn (2015), Bền vững ngân sách ở Việt Nam-Những vấn đề đặt ra, Website Viện Chiến lược và Chính sách tài chính tháng 10/2015;
3. Bộ Tài chính (2020), Đề án “Mở rộng cơ sở thuế và chống xói mòn nguồn thu ngân sách nhà nước giai đoạn từ năm 2020 đến năm 2025”;
4. Vương Thị Thu Hiền, Vũ Thị Tâm Thu (2020), Đổi mới cơ cấu thu ngân sách nhà nước ở Việt Nam theo hướng bền vững, Tạp chí Tài chính số kỳ 1+2 tháng 1/2020;
5. Nguyễn Thị Thanh Hoài, Lý Phương Duyên, Chu Văn Hùng (2020), Điều chỉnh cơ cấu thu ngân sách nhà nước theo hướng phát triển bền vững ở Việt Nam, Tạp chí Tài chính số kỳ 2 tháng 9/2020;
6. Lê Xuân Trường (2021), Định hướng cải cách hệ thống thuế giai đoạn 2021-2030;
7. Allen Schick (2005), Sustainable Budget Policy: Concepts and Approaches, OECD Journal on Budgeting - Vol. 5, No. 1;
8. IMF (2011), Revenue Mobilization in Developing Countries, International Monetary Fund Working Paper;
9. National Academy of Sciences of the United States (2010), Choosing the Nation’s Fiscal Future;
10. OECD (2013), Action Plan on Base Erosion and Profit Shifting, OECD Publishing;
11. OECD/G20 (2021), BEPS Project – Tax Challenges Arising from Digitalisation – Report on the two Pillars;
12. Websites: https://www.oecd-ilibrary.org/; https://www.reuters.com/; https://www.tilleke.com/;
https://www.mof.gov.vn/; http://chinhphu.vn/portal/page/portal/chinhphu/solieungansachnhanuoc.