Compliance cost index shows taxation procedures least pricey for firms

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The APCI report, announced by the Prime Minister’s Advisory Council for Administrative Procedure Reform, marked two years since the current Government took office with the resolve of improving the business climate to attract more domestic and foreign investment, and promote Vietnam’s stature in the international arena.

Minister and Chairman of the Government’s Office Mai Tien Dung said compliance costs includes expenses in terms of time and money, direct and indirect expenses, as well as official and unofficial expenses. (Source: VGP)

The report covers eight groups of important administrative procedures for companies, namely starting business and business registration, taxation, investment, licence and practicing certificate, customs, land, environment, and construction.

In total, 3,000 companies across all 63 provinces and cities were interviewed about their compliance costs during the last half of 2017.

Accordingly, taxation procedures rank first in the APCI which costs businesses only 73,750 VND (3.17 USD) to comply with. Companies also need only 2.9 hours to carry out one taxation procedure on average.

The compliance cost for taxation procedure is equivalent to 0.58 percent of the average cost of the eight surveyed groups of procedures (about 12.7 million VND or 546.6 USD) and only 0.1 percent of that of construction procedures, which was the most charged grouping.

The second place belongs to starting business and business registration procedures which cost companies 720,700 VND (31 USD) and 10.5 hours.

This group is followed by procedures relating to customs; land; licence, practicing certificate and business conditions; investment; and environment.

Meanwhile, enterprises have to spend up to 64.1 million VND (2,758 USD) on average to adhere to construction procedures, although the time needed to deal with them is not the highest (103.9 hours).

According to the report, compliance costs also vary across regions and localities. For example, compliance costs for construction procedures reaches 146.7 million VND (6,313 USD) in the northern key economic region, but only 12.6 million VND (542.2 USD) in the southern region. It is attributed to the different procedures carried out by local authorities.

Minister and Chairman of the Government’s Office Mai Tien Dung said compliance costs includes expenses in terms of time and money, direct and indirect expenses, as well as official and unofficial expenses. Feedback from associations and businesses shows that these costs are very high.

He added that the Advisory Council for Administrative Procedure Reform will continue to hold dialogues with enterprises, collecting their opinions to offer alternative points of view from state agencies. He stressed that reforms must be carried out in a drastic and synchronous fashion so that all costs can be reduced.

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