A Study On The Improvement Of Tax Policies For Vietnamese SMEs

SMEs(small and medium-sized enterprises),accounting for 96%of global enterprises,play an important role in the global economy,being responsible of a huge portion of the total employment,pushing forward the economic development,etc.In Vietnam,small and medium-sized enterprises account for 97%of all enterprises in Vietnam,the use of more than 50%Vietnamese workforce,contribute 47%of GDP and 40%of the national budget.Because of their role in the economy,the development of small and medium-sized enterprises has got the government's concern and support.Developing countries have also provided a lot of help for small and medium-sized enterprises,achieving some success.According to the experience of developing countries,governments need to support SMEs from both financial and non-financial aspects.Small and medium-sized enterprises have certain advantages,such as being easy to start,having flexibility,being able to manufacture traditional products,etc.However,on the other hand they have many limitations,such as small scale,low-skilled management and staff,backward technology,capital investment is difficult to borrow,etc.Therefore,small and medium-sized enterprises need government's assistance in order to thrive.The Vietnamese government has devised a program to support small and medium-sized enterprises in Vietnam(56/2009/ND-CP)the provisions of which put forward support from different sides,such as financial,technical,land conversion,market expansion,information technology,human development,etc..The capital of an enterprise is constituted by its own capital resources plus any borrowed capital.Because of the many difficulties small and medium-sized enterprises encounter while borrowing,it's not easy to borrow at preferential rates,so practically speaking,for most SMEs the capital is limited to their own.A very important part of their capital is the final profit,which constitutes the largest part of the capital increase.However,enterprises must pay taxes on their earnings,so from their standpoint reducing the tax pressure is an important measure to support the development of enterprises.Currently a number of countries in the world are in the process of or have already established a better tax system to support the development of SMEs.At present,the Vietnamese government's help to the tax policy of the small and medium-sized enterprises is only a short-term measure,without long-term support plans.Therefore,the development of SMEs in Vietnam has encountered many obstacles.Still,in 2013 WB(World Bank)business environment rankings,Vietnam ranked ninety-ninth in tax out of 189 countries,falling 11 positions,from the 138/183 to a 149/189.Vietnamese companies need to use a third of their total number of working hours to comply with tax policy(averaging 872 hours).This problem has the greatest impact on SMEs.Therefore,it is crucial to improve the tax policy of Vietnam so as to assist the development of enterprises,especially small and medium-sized enterprises.