Unclear tax policy and customs issues are among what unnerve enterprises in Tan Thuan Export Processing Zone (EPZ) in HCM City’s District 7.
Such concerns were raised at a meeting between HCM City’s leaders and relevant agencies on Thursday.
Unclear tax policy
Despite having operated in Tan Thuan EPZ for more than a decade, several enterprises said they did not know clearly about the corporate income tax they had to pay.
As exporters, enterprises in the EPZ used to be offered various tax incentives. However, since Vietnam joined the World Trade Organisation (WTO), incentives have gradually disappeared. As tax authorities have not provided detailed instructions, many companies are still uncertain about how the corporate income tax is levied.
Suzuki Masanori, general director of Juki Vietnam, said his firm started business in Tan Thuan in 1994 with a corporate income tax rate of 10 percent. Under Vietnam’s WTO commitments, Juki will have to pay a new tax rate from this year but the firm has no idea of a specific rate.
Many other companies in Tan Thuan EPZ such as Towa, Viet Long and MTEX Vietnam are in the same boat. Businesses there pay a different corporate income tax rate.
At the meeting, a representative of the HCM City Tax Department explained that guidance documents and investment certificates mentioned different tax rates. However, despite having read all guidance documents, enterprises still do not know the exact tax rate they have to pay.
Meanwhile, Japan Paper Technology Co. (JPT) touched on another tax issue, saying the environmental protection tax imposed on the firm was unreasonable.
Tran Thi Minh Huong, sales manager of JPT, said that the firm previously did not pay the environmental tax as it mainly imported nylon for export processing. However, to increase localisation and reduce production cost, JPT buys locally made nylon and thus pays the environmental protection tax, making it hard to compete, she noted.
According to Huong, all products of JPT are for export, not for domestic sale, but the firm still has to pay the tax. The tax agency said the environmental protection tax is imposed on JPT’s nylon supplier only.
But this method of taxation still ends up increasing JPT’s production cost, and this discourages EPZ companies from buying nylon material from local suppliers as the environmental protection tax on nylon is high, said Huong.
Complicated customs procedures
In addition to taxes, customs procedures give enterprises in Tan Thuan EPZ a hard time.
Suzuki Masanori of Juki Vietnam said the electronic customs process has helped reduce the number of documents required but it has made life hard for Juki.
Juki buys material from different suppliers. Therefore, when the firm changes the code of material, customs officers require it to change the code of finished product as well but such a code is set by the customer.
Similarly, the certificate of origin (C/O) issuance now takes up to three days although the mandated duration is four to eight hours depending on transport means, according to Juki.