Compliance cost index shows taxation procedures least pricey for firms

The index for administrative procedure compliance costs (APCI) was released for the first time on August 17, assessing the actual expenses businesses and organisations have to incur in order to adhere to existing administrative procedures.

Representatives of businesses wait for procedures to be handed. (Photo: VNA)

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.

The report provides detailed insights into the actual costs that enterprises have to bear to comply with eight groups of procedures, namely business registration, tax, investment, licensing, certificates for practice, land 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 VND 73,750 (USD 3.17) 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 per cent of the average cost of the eight surveyed groups of procedures (about VND 12.7 million or USD 546.6) 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 VND 720,700 (USD 31) 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 VND 64.1 million (USD 2,758) on average to adhere to construction procedures, although the time needed to deal with them is not the highest (103.9 hours).

The report also reveals disparity in the cost of construction compliance between different regions. For example, compliance costs for construction procedures reaches VND 146.7 million (USD 6,313) in the northern key economic region, but only VND 12.6 million (USD 542.2) in the southern region.

Such an imbalance is attributed to the difference in the implementation and behaviour of administrative bodies at the provincial and lower-level authorities.

Therefore, the APCI 2018 results are an indication that there remains a lot of room for further improvement in the execution of administrative procedures and the reduction of compliance costs for enterprises.

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./.

VNF/VNA