Vietnam wishes for increased tax transparency

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This is according to the latest research from the Grant Thornton International Business Report (IBR), a quarterly survey of more than 3,000 businesses in 44 countries.

Under the report’s figure, the above percentage is ahead of the ASEAN figure of 86 per cent.

Ken Atkinson, managing partner of Grant Thornton Vietnam, said the Vietnamese government was working hard to ensure that the tax system was fair and did not penalise businesses.

“To this end the government is proposing to reduce corporation tax from 25 to 23 per cent and from 25 to 20 percent depending on the size of business. In addition, there is a great emphasis being placed on cross border tax liabilities where the tax authorities are looking to get more compliance with the existing transfer pricing regulations,” Atkinson said.

According to IBR, 68 per cent of businesses want more tax guidance - even if it means paying more. Just two-in-five plan to make their own tax affairs more transparent over the next 12 months.

The vast majority of businesses would welcome more global cooperation and guidance from tax authorities on what is acceptable and unacceptable tax planning, even if this provided less opportunity to reduce tax liabilities across borders.

The IBR reveals that two-thirds (68 per cent) of businesses would like more tax guidance. However, there was a marked divergence between regions with 75 per cent of eurozone businesses eager for more guidance compared to just 54 per cent of their North American counterparts.

Similarly businesses in Latin America and ASEAN (both 85 per cent) are more likely to look for advice compared with their peers in Asia-Pacific (67 per cent).

Francesca Lagerberg, incoming global leader of Tax at Grant Thornton, said: "Reducing liabilities across borders can offer significant tax savings so it is interesting to see how open business leaders are to improving guidance and global cooperation. In the UK, recent high-profile cases involving Amazon, Google and Starbucks have certainly sharpened public opinion as to what is acceptable tax planning. It seems the majority of business leaders would also welcome more transparency."

Business leaders are also critical of what the tax regimes in their economies are set up to achieve.

Just 31 per cent globally said their local tax laws and policies were geared to stimulate economic growth, with the heavily-taxed Nordic nations a surprisingly satisfied exception (41 per cent).

Senior executives in Southern Europe (11 per cent) and Latin America (23 per cent) were particularly scathing.

However, in Vietnam, business leaders were much more positive, with 66 per cent believing that taxes are geared towards stimulating economic growth.

Moreover, 49 per cent of business leaders believe their current tax regime does not bring enough economic participants into the tax base, although there was a large divergence of opinion here between G7 businesses (63 per cent) and their BRIC peers (17 per cent).

A further, 41 per cent of businesses do not believe their tax regimes are sufficiently redistributive, led by those in North America (54 per cent).

These figures are in contrast to Vietnam which clearly believes that the tax regime does bring enough economic participants into the tax base, with only 6 per cent feeling that the tax base should be wider.

Lagerberg added that tax was a cost to businesses in its simplest form so it is perhaps unsurprising to see few associate it with economic growth. Moreover, many mature economies around the world are undergoing severe fiscal retrenchment and business leaders are seeing taxes rise even as growth remains flat.

"However, that businesses feel taxes are too regressive and that not enough people and entities are being taxed is perhaps more surprising. It suggests that business leaders would be supportive of changes to the global tax system that would level the playing field," Lagerberg said.

The IBR also reveals that just two-in-five business leaders plan to make their own tax affairs more transparent over the next 12 months.

“This is true of just 25 per cent of G7 businesses compared with 68 per cent of BRIC peers perhaps reflecting the different stages of tax system development the two groups of economies find themselves in and the local pressure in parts of the world to encourage greater openness in relation to tax,” it said.