World Bank: 40% of Vietnamese businesses’ profits go to taxes

14:50, 2014/10/30

In 2014, on average, each Vietnamese firm spends 872 hours paying taxes and the tax costs account for 40.8% of profits, according to the World Bank’s (WB) annual report on the global business environment.

Compared to some countries in the region, Vietnamese enterprises have an unfavorable tax payment period. In Laos and Cambodia, businesses spend respectively 173 and 362 hours to pay taxes. The tax/profit rate in these countries is 21% and 25.8% respectively.

Tariff is just one of the 10 areas examined by the WB to assess the business environment of each country. Of the remaining nine criteria, the WB evaluates the ease of businesses when applying for the establishment license, building permits, access to electricity, property registration, loans, protection in international trade, contract enforcement and handling in case of loss of solvency.
Compared to last year, Vietnam fell back in five areas and improved in only two fields.
After taxation, business establishment and protection of small investors were Vietnam’s weakness, ranking 125th and 117th respectively out of 189 countries.
Specifically, it takes 34 days to establish a business in Vietnam compared to 2.5 days in Singapore, 27.5 days in Thailand, and 31.4 days in China.
In the field of protection of investor, on a scale of 10, Vietnam scored 4.7 - below average.
Generally, Vietnam ranked 78th out of 189 countries in the WB report. Last year, Vietnam stood at 99th position under the old criteria and it would be 72 if the new criteria are used.
The WB’s Doing Business Report has been released annually since 2003. With eight initial criteria, since last year the Bank has added two new criteria, and it will continue adding new criteria to the report next year.
This year (statistics as of June 2014), Singapore continues to be the country with the best business environment in the world.

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