During a conference with the General Department of Taxation on Thursday, Choi highlighted difficulties in obtaining tax incentives, VAT refunds, and clarity on contractor payment recordings, along with the issue of double taxation on international transportation income.
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Choi Youngsam, South Korean Ambassador to Vietnam, at the conference on Feb. 29, 2024. Photo by the General Department of Taxation |
South Korean companies are concerned about the inability to deduct corporate income tax for workers’ overtime beyond 200 hours annually.
“This has caused problems for many companies because they need employees to work overtime due to labor shortages,” a representative of the Korean Chamber of Commerce and Industry said at the conference.
South Korean companies had previously brought up the issue of slow VAT refunds in a meeting with HCMC authorities last year.
Choi commented that to boost foreign investment in Vietnam, helping existing foreign companies expand was just as important as attracting new ones.
New businesses will observe how these firms operate in Vietnam to assess the country’s investment environment.
“They are very sensitive to uncertainty,” Choi said, adding that an opaque and unpredictable tax administration system could stymie investment.
Therefore, he recommended that Vietnam maintain a stable economic ecosystem to expand the tax base and ensure a steady inflow of state budget revenue.
In response, Deputy Minister of Finance Cao Anh Tuan reassured the representatives that the ministry has received and processed hundreds of documents from South Korean businesses operating in Vietnam, and that it had issued many solutions, some of which are “unprecedented,” to resolve these difficulties.
Any matters that are beyond his and the ministry’s authority will be noted and reported to the government.
The ministry is committed to improving policies and reforming administrative procedures to create a more equitable and favorable business environment for enterprises, he added.
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Cao Anh Tuan, Vietnamese Deputy Minister of Finance, at the conference on Feb. 29, 2024. Photo by the General Department of Taxation |
Regarding the tax refund policy for expansion projects, Mai Son, deputy general director of the General Department of Taxation, said the department was currently reviewing and expediting the VAT refund process.
As for workers’ overtime, Son reiterated that the maximum overtime was 200 hours per year, per worker, with some specific jobs allowed to have 300 hours.
“Businesses need to find other solutions to ensure compliance and the health of their workers,” he suggested.
According to the Ministry of Finance, South Korean enterprises’ contributions to the state budget have been increasing annually, totaling nearly VND175 trillion ($7.09 billion) over the past five years and accounting for 3% of the national budget and 11% of the state budget revenue from foreign enterprises.
With nearly 9,900 projects as of January, South Korean firms have the highest number of projects among the 144 countries and territories that have invested in Vietnam.
Among these, South Korean conglomerate Samsung has invested over $22 billion in Vietnam.
