The business environment in Vietnam has significantly improved in recent years. A core element of this is attributed to the tax and legal system in the country. The Vietnam Business Forum had an interview with Mr Trinh Van Que, chief of SMIC law firm, on the impacts of laws and taxes on the business and investment environment in Vietnam.
What do you think about the legal and tax environment of Vietnam and how do its advantages and difficulties affect the business and investment environment in Vietnam?
I think the scope of this question is rather broad. Each law or tax rate in Vietnam generates specific advantages or difficulties for the business environment. However, we can assess the overall current legal and tax environment in Vietnam in the following three points:
First, Vietnam has a relatively sufficient legal system to regulate business and investment activities. This is an advantage for businesses and investors to apply their business initiatives.
Second, regarding quality, Vietnamese legal documents also satisfy the requirements of international laws and of developed nations. In order to join the World Trade Organisation (WTO), Vietnam had to amend its legal systems to meet WTO requirements and standards. Vietnam is continuing to meet its international commitments to match its domestic laws and international rules. Legal transparency as well as more involvement of businesses and investors in the lawmaking process will help lawmakers enact effective legal and policy changes in Vietnam. This is the second advantage for businesses and investors.
Third, in spite of the above good aspects, the Vietnamese legal system still has certain weak points. Overlapping legal documents have caused much difficulty for enterprises and investors. Personally, however, I think this is not a significant hindrance against business and investment in this country.
How do you assess the impacts of the Law on Credit Organisations, Investment Law and Corporate Tax Law as well as other laws with relation to the development of the Vietnamese stock market? What should Vietnam do to turn its fledging stock market into a strong one?
Of course, each law has distinct impacts on the legal and business environment and, in turn, the environment has a huge impact on the development of a financial market, in which the stock market is an integral part.
Looking into three laws, the Law on Credit Organisations regulates the organisation and operations of banks and non-banking credit organisations. A strong system of banks and financial institutions will improve cash circulation and create investment sources for the Vietnamese stock market. The Law on Investment stipulates procedures for investing in Vietnam. Together with the Enterprise Law, this law is the legal framework for the development of a strong business system and a good investment environment for enterprises to do business and carry out investment projects. A fundamental impact of this law on the stock market is on the “goods” supply for this market. The Corporate Tax Law also has a strong impact on the stock market. This law stipulates taxes on corporate incomes from financial investment, including stock investment. Besides, we are going to introduce the Personal Income Tax, which will cover tax on incomes from stock dealings. Clearly, this discourages individual investments. However, the Law on Securities and instructive documents for the implementation of this law cover all aspects of stock market operation and development. These legal documents have created a legal environment for the market to perform well.
Personally, I think Vietnam should improve the above laws to develop the stock market.
Do you have any advice for foreign investors seeking investment opportunities in Vietnam, of course, regarding legal questions?
I think this is a right time for foreign investors to do business in Vietnam. The legal system in Vietnam has never been as solid as it is now, and this system will be further improved to match the integration process.
Van Chien
Vietnamese
