Tax for development: Does Vietnam need tax reform?

By Patrick Lenain

“Vietnam’s government collected tax revenue equivalent to 16 per cent of GDP last year, according to the International Monetary Fund. This is less than Malaysia (18.3 per cent), Singapore (18.5 per cent), India (19.7 per cent), Thailand (20.3 per cent), and China (27 per cent). This is also less than before the pandemic, reflecting numerous tax cuts made during periods of confinement.”

“Vietnam’s government revenue is weakened by numerous tax incentives, loopholes, exemptions, deductions, allowances, credits, preferential tax rates, and tax holidays – so-called tax expenditures. Some of these tax expenditures are warranted, such as well-designed research and development tax credits to stimulate innovation.”

“Rather than hiking tax rates, revenue mobilisation can result from other efforts: broadening tax bases, improving tax compliance, and using taxes to protect the environment. This is actually what the government plans to do with Decision No.508/QD-TTg, with the goal of mobilising government tax revenue by 2030.”

Read Patrick Lenain’s full article on Vietnam’s path towards revenue mobilization (originally published by Vietnam Investment Review) here.