TAXATION POLICY AND TAX REFORMS IN VIETNAM Assignment

TAXATION POLICY AND TAX REFORMS IN VIETNAM - Assignment Example The taxation policy of an economy has a major impact on its economic condition. Understanding the taxation policy of a country helps in assessing the role of income taxes on the economic growth. Countries constantly engage in debate to strike the right balance of taxes for the planned economies progress (Miller, & Oats, 2009). Economic analysts suggest that economic policies are very important for the growth of an economy. Taxes are important sources of finance for the governments. Governments implement combination of direct and indirect based to generate effective results and higher revenues for meeting capital and public revenue expenditure (Jones, Rhoades-Catanach, & Lemler, 2010). The governments which have more opportunities for generating finance from revenues of public enterprises besides tax implementation attempt to design the lenient taxation policies which attain effective results. Vietnam was a developing economy and it had shown dramatic development over the years. This dramatic growth of the country with the passage of time is centrally attributed to its economic policies. One major component of these is the taxation reforms. ECONOMIC OBJECTIVES AND TAXATION STRUCTURE OF VIETNAM After the war in 1954-1975, Vietnam adopted a market oriented strategy for development. The process of the reforms was initiated during the mid 1980’s. Before these reforms were proposed, the state was playing a very important role in the economic development of the country. The government’s revenue collection from the enterprises was linked to profit sharing with the organizations. For achieving the objectives of efficiency in government organization, it was mandated for the managers to abide the directives and the policies proposed by the state. This was aimed at improving the performance of the economic performance of the government and private enterprise in local and international market (Yui, n.d.). New legislations were enacted and the promulgations of the company law were also implemented. The changes were made to the foreign Investment Law, Private Enterprise Law and the Company law. During this time the first phase of the reform was implemented. At this time th e government was in dire need of implementing the policies and overcoming the economic challenges such as controlling the effect of hyper inflation. Implementations of the policies were forced with reforms in the import and export taxes, special consumption taxes and profit taxes etc. The enterprises that were non state owned were levied with registration tax, excise tax and agricultural taxes. This in result had direct impact on the FDI and increased the overall productivity of the economy. These reforms were considered for contribution in the economic improvements and these practices made the tax system more transparent. The overall series of measures of growth contributed to the economic development significantly and growth of the Vietnam economy over the years. Through these reforms the overall growth in the revenue of the economy increased by more than five times. The report here after focuses on the reform in the taxation policies of the Vietnam (Yui, n.d.). REFORMS IN THE TAX ATION POLICY OF VIETNAM The taxation system plays a very important and critical role in structuring the macroeconomic conditions of the economy. . The initial measures mentioned above had significant impact on the economy of Vietnam. It contributed towards the success of Vietnam with its social and economic developm