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Multitude of options on table for further tax interventions

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With the current outbreak still not entirely controlled, the government stands at a complicated crossroads as it needs to choose between further state budget security and continued support for the business community.

Multitude of options on table for further tax interventions

Businesses are struggling to balance budgets and seek further support via various means in order to ride through the ongoing pandemic. Photo: Le Toan

If taxes and land rents continue to be extended as a form of direct support for businesses, the state’s budget revenue may come under more pressure. But an intervention to help businesses could support the economy in recovering more strongly after the pandemic, especially since the government is working intensely on pandemic prevention and promoting expanded vaccination.

Tax payment extensions, as well as beneficial land rent policies, are a matter of concern, but not a new policy. Vietnam has had three extensions for tax and land rent since the pandemic broke out in early 2020. However, the most recent outbreak in Vietnam has engulfed the ongoing efforts to revive the country’s production.

The government has issued Decree No.52/2021/ND-CP dated April 19, extending the deadline for payments of VAT, corporate income tax, personal income tax, and land rents in 2021. The extension period of five months for VAT lasts until June.

Nguyen Tu Anh, director of the General Economic Department of the Central Economic Commission, said extending tax payment dues and land rents is a good policy. Instead of collecting taxes immediately, the state has granted businesses a credit with zero per cent interest to maintain production, without complicating tax policies, and even reducing policy profiteering.

In addition, data from the General Department of Taxation under the Ministry of Finance also shows that the tax authority has extended payment dues for nearly 185,000 taxpayers last year, with a total amount of about VND87.3 trillion ($3.8 billion). This shows that the government is trying to counter price increases of goods like steel, construction materials, and other items that play an important role in infrastructure development.

Keeping the balance

With the government’s tax and land rent payment extensions, analysts are concerned about the negative side of the policy.

“This form of support is not very effective for those businesses in real difficulties, especially when they lack working capital and cash flow,” explained Anh. “Profits and negative side effects could come from those businesses that need direct support from the state’s policy.”

Negative effects could occur from both sides, the implementing organisation and enterprises, as they may have insufficient resources to evaluate, examine, and monitor all related processes, he added. If such support is carried out ineffectively, businesses that need it will not receive it, and those that do not need could receive support.

To date, vexations and negativity continue to exist in tax collection, although it has decreased year by year. About 30 per cent of businesses say they still must pay special fees for tax officials, according to a report by the Vietnam Chamber of Commerce and Industry from December 2019.

However, Anh does not think that such support policies are effective in a short time. Therefore, it may be necessary to focus on dedicated government support packages. According to him, as there is now another outbreak troubling the nation, “businesses will benefit more if the government extends the implementation of the tax and land rent policy until the end of the year.”

In principle, he argued, the state should support businesses to endure the pandemic. The damage will be much greater if businesses continue to go bankrupt.

“However, the extension of tax and land rent will also slow down state budget revenue, while the implementation of this policy is also very complicated and expensive,” Anh said.

The target audience for such policies is large. Luu Duc Huy, director of the Policy Department under the General Department of Taxation, however, said that there should be no general survey to determine businesses eligible for the extended benefits. Micro- and small enterprises have accounted for 93 per cent of the total number of operating businesses. In addition, businesses in other industries and business households are also subject to these benefits.

According to Huy, the tax authority is managing eligible business according to risk management mechanisms and conducts inspections whenever taxpayers show signs of risk.

“This helps self-identify the taxpayers. Those who are not subject to these extensions but still benefit from it will be handled following the Law on Tax,” Huy said.

The government is standing in the middle of a fork in the road. On the one hand, it wants to help people and businesses to withstand the pandemic. On the other, its ability remains weak as there are many bankrupt businesses or those threatening to go bankrupt without paying taxes. Proposals to extend the extension and further reduce taxes also require considering the resilience of the state budget as this is also used for combatting the pandemic and handling the otherwise shrinking revenue sources.

Lining up interests

Economist Nguyen Tri Hieu said that there must be a harmonisation of interests. “The extension of tax and land rent for businesses is necessary, but balancing the budget is also important,” he said.

The state budget has been affected by the pandemic since last year, and the government’s revenue is limited. In 2020, the budget revenue stood at only 96.35 per cent of the estimate, according to the State Treasury.

According to Hieu, businesses are under a lot of stress because the pandemic has slowed down consumption and production, while input material prices have increased in turn. Compared with the first five months of 2020, prices for iron, steel, and cement have increased by 35-40 per cent, and those for corn, beans, and rice bran increased up to 70 per cent. Meanwhile, the current gasoline prices also exceeded VND19,000 (83 US cents) per litre, an increase of nearly 14 per cent compared to the end of 2020 and more than 60 per cent compared to the same period last year.

Also in the first five months of 2021, the market recorded 59,800 enterprises suspending their operations for a definite time, an increase of 23 per cent over the same period. Thus, on average, nearly 12,000 businesses withdrew from the market every month, equivalent to 400 businesses every day.

According to Hieu, the government needs to “soon take measures to harmonise interests between itself and the business community.” The government, within its budget, “should defer taxes and land rents for another year and, along with that, review the conditions for tax extensions and land rents so that businesses in need can access it. For example, the conditions on procedures and declarations of enterprises related to land need to be more open.”

In principle, businesses should be responsible for paying taxes within their means, but according to Hieu, the government needs to reconsider the subjects for tax exemption, reduction, and deferral.

Some companies take advantage of these tax policies to make a profit. Though they can pay taxes, the policy allows them to benefit. “If we don’t control the pandemic well, this year the number of businesses going bankrupt could rise to hundreds of thousands, causing a significant deficit in the government’s revenue,” said Hieu.

Tax revenue data from the General Statistics Office shows an increase of nearly 12 per cent in the last five months. The current outbreak is gradually being controlled while the expansion of vaccination has been accelerated. Tu Anh reckoned that there is a high possibility that production and business activities can soon stabilise again. The government’s timely support could also help businesses in this endeavour.

Source: VIR

Source: https://vietnamnet.vn/en/business/multitude-of-options-on-table-for-further-tax-interventions-746935.html

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Businesses dig deep to make sure they come out on other side of pandemic intact

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A customer tries to book a quarantine hotel service on Traveloka app. Traveloka and many businesses in Việt Nam are making efforts to survive the forth wave of COVID-19 pandemic. — Photo

Thu Ngân

HCM CITY — Businesses in Việt Nam are making all efforts to survive the fourth wave of COVID-19 which is battering the country.

Giant food producer KIDO Group said in a recent press release it has adopted a number of solutions to adapt to the new situation and keep production going while also ensuring safety.

A spokesperson told Việt Nam News that to ensure uninterrupted production, the company has adopted the “3 on-site” model, which involves on-site production, dining and rest, for over a month.

It unfailingly complies with the provisions of the Government’s circular No 16 and 5K message, he said.

It is also preparing for life after the pandemic, he said.

“We are ready to bring new products and segments into the market immediately after COVID-19 is controlled.”

It plans to introduce the Vibev brand of products made in collaboration with Vinamilk.

Another plan is to introduce Chuk Chuk, a new food and beverage brand, opening 1,000 stores by 2025.

The company’s general director, Trần Lệ Nguyên, said the first market for Chuk Chuk would be HCM City, and stores would open in Hà Nội and some northern provinces by September if the pandemic is controlled by then, adding it would be present across the country by 2025.

Ride-hailing and delivery company Grab has rolled out a number of programmes to help customers buy foodstuffs.

To ensure the safety of its drivers and customers, it has tied up with the General Department of Vocational Education and Training to fully equip its drivers with the necessary skills and competencies.

They have also jointly built and standardised the training materials, and drawn up communication plans for raising awareness about vocational skills development for drivers.

Trương Anh Dũng, director general of the department, said: “The COVID-19 pandemic has had a great impact on the Vietnamese economy, and drivers cannot be immune to it. This partnership helps resolve long-term problems for technological drivers, equipping them with the necessary skills to sustain and improve not only their livelihoods but also the quality of life of themselves and their families.”

Grab also has a programme to support disadvantaged people in HCM City in co-operation with Golden Lotus Foundation. It provides free meals to people economically affected by the pandemic or living in locked-down areas.

To start with, around 11,500 meals would be provided, it said.

Tourism is one of the many sectors badly hit by the pandemic, and many businesses in it have been striving to overcome the challenges they face. 

For instance, before the semi-lockdown began weeks ago some hotels had begun to offer co-working space to provide customers with a safe working environment.

Now, with stricter social distancing regulations, they have changed their strategy and offer quarantine facilities, and this has received strong support from customers.

Recently a Southeast Asian travel and lifestyle superapp, Traveloka, announced that it is working with the HCM City Department of Tourism to help the city’s residents find and book hotels and transportation to enable quarantine. 

Demand for quarantine facilities has increased along with the developments of COVID-19 in HCM City, and its quarantine hotel and transportation online booking and payment solutions are expected to help curb the spread of the pandemic by limiting direct contact between people, Traveloka said. 

They have been available since the start of August. 

Lê Trương Hiền Hoà, director of the HCM City Tourism Promotion Centre, hailed the partnership, saying: “With support from Traveloka, HCM City is the first city in Việt Nam to digitise the quarantine hotel booking process … and will extend it to international arrivals in the near future. 

“It also helps hoteliers switch their business model to survive amidst the COVID-19 pandemic.”

With the aid of the app’s advanced technologies, customers can easily access complete information about room types, prices and transportation options in real-time, and pay for it via Traveloka. 

Traveloka said it is partnering with more than 80 hotels and selected transportation partners across HCM City, including private cars and shuttle buses. 

MVV Academy, a pioneer organisation for comprehensive, on-site and advanced resource development solutions in Việt Nam, decided to organise training programmes to make its staff sales consultants and brand ambassadors to introduce its products to the public. 

It also recently launched MVV Uni, an advanced training platform that offers working professionals an interactive and flexible experience to support their various learning needs, and acts as a one-stop-shop with courses in all essential business skill sets such as leadership, sales, marketing, management, soft skills, and digital transformation.

“The COVID epidemic has disrupted many human resource training activities at Vietnamese enterprises,” Bùi Đức Quân, CEO of MVV Academy told Việt Nam News.

“Taking advantage of the strength of technology, combined with experience in content building and understanding of learner experience through operating platforms such as TopClass and Everlearn, we quickly built a solution, MVV Uni, to offer enterprises training programmes for their employees during Covid.

“Our ambition is to build a university community on the cloud.” —

 

 

 

Source: https://vietnamnews.vn/economy/1003623/businesses-dig-deep-to-make-sure-they-come-out-on-other-side-of-pandemic-intact.html

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COVID-19 forces banks to accelerate digital transformation

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The COVID-19 pandemic not only creates challenges for banks, but also pushes them to foster digital transformation to survive, experts have said.

COVID-19 forces banks to accelerate digital transformation
A customer makes payment via a QR code. The COVID-19 pandemic pushes bank to foster digital transformation to survive. — Photo laodong.vn

A recent survey by the State Bank of Vietnam found that 95 per cent of credit institutions in Vietnam have either implemented digital transformation strategies or are in the process of formulating them.

It is expected that in the next three to five years digital-only banks will have revenue growth of at least 10 per cent, while regular lenders will have more than 60 per cent of customers using digital transaction channels.

State-owned banks seek to digitise their entire system, while smaller banks have identified certain areas to improve service quality and the customer experience.

Commenting on digital banking development in Vietnam at an online talkshow IDG TekTalk on Tuesday, Phan Viet Hai, director of information technology and also the digital banking centre at Viet Capital Bank, said digital banks must create a superior customer experience by changing the way services are provided using technology.

Nguyen Quang Minh, deputy CEO, partnerships, Timo Digital Bank, said, “In addition to offering perfect and up-to-date financial products and services, we also have to really understand the market, customers’ needs and expectations and more importantly, identify the problems and difficulties they are facing every day in each transaction.”

Pham Quang Minh, general director of Mambu Vietnam, said banking services have changed greatly in the past few years. In Asia, including Vietnam, rising customer expectations for online and mobile banking services are the driving force behind the digital transformation of financial service providers.

Nguyen Van Tuan, deputy general director of VCCorp & founder of Bizfly Digital Transformation, said currently banks are not only competing with each other but also with rapidly growing fintech companies, which have created “amazing” services and experiences through digital technology and transformation.

For succeeding at the digital transformation, the determination shown by a bank’s bosses plays an important role, he said.

“Technology contributes only around 30 per cent to the success with the remaining 70 per cent being owed to other factors like the mindset of businesses’ leaders and digital transformation,” he added.

According to experts, banks still face challenges in digital transformation related to regulations on electronic transactions, data sharing, network security, and an inadequate legal framework among others.

They said completing a comprehensive legal framework would provide a fillip to digital transformation.

The standardisation of technical infrastructure is also very important to facilitate interconnection and seamless integration between the banking industry and others to form a digital eco-system, they added.

Yeo Siang Tiong, cybersecurity company Kaspersky’s general manager for Southeast Asia, said: “Digital transformation, in any sector, always presents new challenges, but especially for banks and for financial services. To put it simply, revolutionising banks’ way of doing transactions means overhauling their legacy systems including people, processes and technologies.”

Humans remain the weakest link, especially those who lack proper awareness of the simplest risks like phishing and spam, while employees require new training and third-party services should be assessed comprehensively, he said.

“When it comes to security, the endpoint should be the foundation and banks should have known this by now. Financial services should be looking at an adaptive approach in security, which should be proactive rather than reactive – ready before an attack happens.” 

Online transaction increases

Due to social distancing restrictions amid the pandemic, online payment has become more convenient than cash, and, with just a smartphone and banking application, users can save, borrow money, pay for electricity, water, television, and internet bills, buy movie and airplane tickets, make hotel reservations, or even buy vegetables or meat online.

Pham Tien Dung, head of the State Bank of Vietnam’s payment department, said online transactions in the first four months of the year jumped by 66 per cent in terms of numbers and 31.2 per cent in value year-on-year, including 86.3 per cent and 123.1 per cent on mobile phones and 95.7 per cent and 181.5 per cent using QR codes.

Statistics from the National Payment Corporation of Vietnam, show that in the first five months its automatic clearing house processed over 800 million transactions worth over VND8 quadrillion ($347.7 billion), an increase of 113 per cent and 169 per cent.

A recent survey by Visa also revealed strong increases in the use of e-wallets, contactless payment via cards and smartphones and QR Code. The year-on-year growth rate of the total e-commerce transaction value in the first quarter of 2021 rose by 5.5 times compared to the fourth quarter of 2020.

Source: Vietnam News

Source: https://vietnamnet.vn/en/business/covid-19-forces-banks-to-accelerate-digital-transformation-763095.html

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COVID-19 affects progress of power transmission projects

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Workers at a construction site of a power transmission project. — VNA/ Illustrative Photo

Bùi Văn Kiên, deputy general director of the National Power Transmission Corporation (EVNNPT) talked to Vietnamplus.vn about solutions to remove difficulties and promote the disbursement of public investment as well as production and business amid the pandemic.

The COVID-19 pandemic is spreading in many parts of the country. How does this affect the progress of power transmission projects?

Many provinces and cities are now under social distancing. The pandemic has greatly affected the management, administration and implementation of power projects.

EVNNPT units can not work with the local government to implement the projects due to social distancing.

Consulting units face difficulties in travelling, conducting field surveys, measurements and applying for forest conversion to other purposes.

Localities can also hardly implement compensation for site clearance projects.

Isolation regulations has also affected the purchasing, supply of materials and construction. While goods transportation services from abroad to Việt Nam are not available due to the pandemic. 

In addition, the price of construction materials is still increasing due to the impact of the pandemic, affecting the selection of contractors and the performance of related contracts. 

What has EVNNPT done to ensure the dual goals of both construction investment and pandemic prevention?

In order to ensure the dual goals, EVNNPT has sent many documents to the People’s Committees of provinces and cities, requesting continued coordination in implementing compensation for site clearance, creating favourable conditions for employees and  contractors in travelling, transporting materials and equipment and construction. So many difficulties and obstacles have been removed.

The units have also applied information technology in management, administration as well as handling problems arising during the implementation of projects by online meetings.

EVNNPT has requested consulting contractors to have appropriate solutions to reduce the impact on project progress such as hiring qualified subcontractors, and cooperating with other units.

Thanks to those efforts, EVNNPT has completed many power projects in Pleiku, Đắk Nông, Lai Châu, Thanh Hóa and Ninh Thuận.

For urgent power projects to be completed in 2021, especially renewable energy projects, what has EVNNPT done to ensure the projects are completed on time?

For key and urgent projects, EVNNPT has established a steering committee to run these projects smoothly, minimising the time to deal with related works. We regularly review the progress of projects to promptly solve problems that arise during implementation.

What recommendations does the corporation have for the Government to deal with difficulties?

The negative impact of the pandemic on the progress of power transmission projects is huge.

In order to help EVNNPT soon remove difficulties and complete projects on time, we expect the Government, ministries and local authorities to identify the electricity industry as an essential service, related to national energy security, socio-economy and people’s lives.

We hope that the travelling of workers and the transportation of equipment and materials for construction will be facilitated when meeting pandemic prevention regulations.

Ministries and agencies should soon have support policies due to the increased prices of supplies and materials as well as consider exempting responsibility for EVNNPT when it fails to meet the progress of projects due to the pandemic.

The People’s Committees of provinces and cities should also direct local departments, agencies and units to closely coordinate with EVNNPT and the project management boards to implement works related to power line routing, forest conversion and compensation for ground clearance. —

Source: https://vietnamnews.vn/economy/1003784/covid-19-affects-progress-of-power-transmission-projects.html

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