This is what Pham Minh Duc, Senior Economist at the World Bank in Vietnam, told FutureGov Asia Pacific.
The tax reform programme, called the Tax Administration Modernisation Project (TAMP), is underway and will reach full implementation by 2015.
The US$85 million project will cover four components, including institutional development for tax administration, operational modernisation of tax administration functions and processes, project management and IT development.
TAMP will concentrate on IT development through the creation of a Tax Administration Information System (ITAIS).
Duc said ITAIS will cover 80 per cent of TAMP, costing US$70 million.
ITAIS will constitute procurement, installation and testing of ICT hardware and system software, e-tax applications and a pilot data warehouse.
It will cover the automation of the full functionality of tax administration in such processes as registration, returns, payment, refunds, taxpayer accounting, assessments, compliance/delinquency control, collections, audit and investigation, appeals, revenue accounting and taxpayer services.
Moreover, ITAIS will handle all tax administration functions, including case management, taxpayer notices, workflow, document control, data entry/importing, report writing and system administration.
“The computerisation of tax administration functions and processes is a key requirement for achieving efficiency,” said Duc.
Through TAMP, the General Department of Taxation (GDT) of Vietnam aims to reinforce governance in tax administration and raise the level of voluntary compliance with the tax system through increased efficiency, effectiveness, accountability and transparency.
Duc said that the changing economic environment of Vietnam has necessitated the need for a modernised tax system.
He said that Vietnam is steadily moving towards a market-based economy from the previous centrally-controlled model.
With this shift, the tax system of Vietnam, which in the past was dominated by state-owned enterprises, will have the private sector as its highest contributor.
“While the increase of the role of private sector is obvious, you don’t see that reflected in revenue collection results,” said Duc.
Duc said this is caused by the problem of compliance brought by the rising number of taxpayers.
“If they still rely on the manual, old system of tax collection, it’s going to be a problem,” he said.
“They need to have a new model system that reacts quickly to facilitate the voluntary compliance of taxpayers.”
The ITAIS has just entered procurement stage.
Meanwhile, the DGT is drafting a five year executive plan for tax administration organisation for the period of 2011 to 2015.