Decision No. 201/2004/QD-TTg on approving the tax system reform program until 2010

Pursuant to …;

Regarding the approval of the tax system reform program until 2010

_____________________

PRIME MINISTER

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

Pursuant to the strategic goals for economic and social development from 2001 to 2010;

Pursuant to the conclusions of the Politburo's opinion in Circular No. 147-TB/TW dated July 16, 2004 of the Central Committee;

At the proposal of the Minister of Finance,

DECISION:

Article 1. Approve the tax system reform program until 2010 with the following main contents:

1. General objectives: To build a synchronized tax policy system with a reasonable structure suitable for a socialist-oriented market economy, combined with modernizing tax management work to ensure national income mobilization policies, ensuring financial resources to serve the country's industrialization and modernization process; contributing to equality and social justice and proactive integration into the international economy.

2. Specific objectives and requirements:

a) Tax, fee, and charge policies (hereinafter referred to collectively as tax policy) must be a tool for macro-management and regulation of the State over the economy, mobilizing all resources, promoting rapid production development; encouraging exports, investment, technological innovation, structural economic transformation; ensuring high and sustainable economic growth, contributing to stability and improving people's living standards.

b) Tax policy must fully mobilize revenues into the state budget, ensuring the regular expenditure needs of the State and reserving a portion for accumulation to serve the country's industrialization and modernization process. Ensuring that the average annual tax revenue mobilized into the state budget reaches 20% - 21% of GDP.

c) Tax policy must reflect and create specific contents consistent with the process of integrating into the international economy, while ensuring selective, time-limited, and conditional protection requirements in a reasonable manner, enhancing the competitiveness of the economy, promoting production development, and ensuring national interests.

d) Tax policy must create a fair and equal legal environment, applying a unified tax system without distinction between different economic sectors as well as domestic enterprises and foreign-invested enterprises.

e) Vigorously reform the tax system towards simplicity, transparency, and openness; separate social policies from tax policies.

f) Quickly modernize and enhance the capacity of the tax administration machinery; overcome negative phenomena and weaknesses to make the tax administration machinery clean and strong.

3. Contents of tax policy reform:

a) Enact new anti-dumping taxes, countervailing duties, anti-subsidy duties, environmental protection taxes, property taxes, and land use taxes.

The issuance and implementation of these new taxes must pay attention to the objects, levels, and timing of application to be appropriate with the country's socio-economic conditions, ensuring stable production, markets, and people's livelihoods.

b) Amend and supplement synchronously existing tax types; gradually increase the proportion of domestic revenue sources to be consistent with the process of integrating into the international economy, expanding the scope of direct taxes and increasing the proportion of direct taxes in total tax revenue.

c) Contents and timelines for reforming some major tax types:

- Value Added Tax (VAT): By 2008, complete the reform towards reducing the number of goods and services not subject to VAT to facilitate the calculation and deduction of VAT at each stage of production and business; apply a single tax rate to ensure fairness in tax obligations and simplify the calculation of VAT on goods and services; improve the method of calculating VAT, moving towards determining the turnover threshold for VAT liability to implement a tax deduction method, consistent with international practices.

- Special Consumption Tax: By 2008, complete the reform towards expanding the scope of special consumption tax, adjusting special consumption tax rates to align with income redistribution and consumption guidance goals. Progressively eliminate exemptions and reductions in special consumption tax to ensure fairness and equality in tax obligations and the principle of non-discrimination between domestically produced and imported goods.

- Export Duties and Import Duties: In 2005, submit to the National Assembly for the completion of the Law on Export Duties and Import Duties towards encouraging maximum exports; amend provisions on tax rates, taxable values, and payment deadlines to fulfill international commitments and practices; amend procedures and processes for tax collection and payment to be consistent with the Customs Law, contributing to strengthening the management of import and export activities according to international commitments.

- Anti-Dumping Duties, Countervailing Duties, and Anti-Subsidy Duties are expected to be submitted to the National Assembly for enactment by the end of 2005.

- Corporate Income Tax: By 2008, complete the reform towards reducing tax rates, narrowing the scope of exemptions and reductions; unify tax rates and incentives among different economic sectors to encourage investment and ensure competition equality.

- Personal Income Tax: By 2007, submit to the National Assembly for the enactment of the Law on Personal Income Tax to replace the current High-Income Personal Income Tax Ordinance towards expanding the scope of taxpayers and tax subjects, narrowing differences between Vietnamese and foreign taxpayers.

- Land Use Tax and Natural Resource Tax: By 2008, complete the reform towards expanding the scope of taxpayers and tax subjects.

- Environmental Protection Tax: By 2008, submit to the National Assembly for the enactment of the Law on Environmental Protection Tax towards making products and services causing environmental pollution the objects of taxation; the basis for calculating tax should be determined appropriately for each type of environmentally polluting product and service. Revenue from the Environmental Protection Tax shall only be used for environmental protection purposes and not for other uses.

- Property Tax: By 2008, submit to the National Assembly for the enactment of the Law on Property Tax towards expanding the scope of taxable assets to ensure fairness among organizations and individuals with ownership and usage rights over assets.

- Regarding fees and charges, they will be rearranged in the direction of continuing to review, abolish or amend unreasonable fees and charges that cause inconvenience to production and daily life. Fees collected for providing public services will gradually shift to service prices, and fee types with tax characteristics will be converted into taxes. Uniform levels of fees and charges will be established for domestic organizations and individuals and foreign organizations and individuals to ensure social equity.

4. Content and timeline for tax administration reform: intensify administrative reform in tax management, enhance Vietnam's tax management level to match those of countries in the region in the direction of:

a) Modernizing all aspects of tax management work, including management methods, administrative procedures, organizational structure, staff队伍建设，广泛采用信息技术以提高对所有纳税对象和缴税对象的管理监督效率，最大限度地减少税收流失，确保及时、足额地将国家预算收入纳入国库。

b) Strengthening administrative reforms in tax collection management work to enhance the authority, responsibility, and effectiveness of the tax management system. In 2006, the National Assembly will promulgate the Tax Administration Law to clearly define the obligations and responsibilities of taxpayers, tax authorities, and other related organizations and individuals; supplement compulsory tax enforcement measures and tax investigation powers for tax authorities. Starting from 2007, implement the self-reporting and self-payment mechanism nationwide.

c) Implement extensive publicity and education on taxation through various forms to raise taxpayers' awareness of voluntarily complying with tax laws; encourage and vigorously develop tax advisory and accounting services; expand the scope of tax declarations. Starting from 2005, provide various forms of tax support services for all taxpayers nationwide.

d) Apply modern information technology to tax management work: during the period of 2005-2008, connect networks between tax, customs, treasury, enterprises, and relevant agencies; develop application programs to support inspection and audit work; provide support services for taxpayers; develop application programs for taxpayer self-reporting and self-payment mechanisms; develop application programs for individual income tax management.

During the period of 2009-2010, consolidate established programs, expand information connectivity with all related organizations and individuals to serve tax management work.

e) Expand agency collection for certain types of revenue linked to payment institutions to ensure prevention of revenue loss.

f) Enhance training and capacity building to improve the leadership, professional expertise, and moral character of tax officials towards specialization and professionalism.

g) Improve the quality and effectiveness of tax inspection and audit work to prevent, detect, and promptly handle violations of tax laws.

5. Implementation measures:

a) Strengthen the direct and continuous leadership and guidance of the Party, National Assembly, Government, Ministries, sectors, and local authorities at all levels in all aspects of the tax field and tax system reform.

b) Mass media and the national education system have the responsibility to intensify publicity and education on tax policies so that all organizations and individuals understand and strictly comply with tax laws. Commend organizations and individuals who fulfill their tax obligations well, while strongly criticizing violations of tax laws.

c) Perfect and comprehensively reform land management mechanisms, cashless payment systems, business registration, import and export, entry and exit, accounting, pricing, etc., to create favorable conditions for tax management and tax system reform.

d) Enhance the responsibility of organizations and individuals in cooperating with tax authorities such as providing information, investigating, handling violations, resolving complaints and accusations, and other administrative measures to improve the effectiveness of tax laws.

e) Encourage and promote tax advisory, accounting, auditing, and tax agency activities to help organizations and individuals understand tax regulations, perform accounting work well, and fulfill their obligations and responsibilities.

f) Improve the tax administration system according to functional management, strengthen the responsibilities and powers of tax authorities at all levels.

g) Enhance training and capacity building to improve the professional expertise of tax officials towards specialization and depth, meeting advanced and modern tax management requirements.

h) Tax policies are stipulated and only have legal validity in tax-related legal documents.

Article 2. The Ministry of Finance is assigned to lead and coordinate with ministries, ministerial-level agencies, government-affiliated agencies, provincial people's committees under the central government to implement the tax system reform program until 2010 as stated in this Decision.

Article 3. This Decision takes effect fifteen days from the date of publication in the Official Gazette.

Article 4. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of People's Committees of provinces and centrally governed cities are responsible for implementing this Decision.