Taxation and Accounting of Corporate Income Tax in SMEs in Vietnam

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Taxation is significant revenue for every country. Effective tax policy is a policy that both provides a stable income for the state budget and gives autonomy and equality to taxpayers. Small and medium enterprises (SMEs) in Vietnam have been essential for their contribution to employment, innovation, economic growth and diversity. As of 31/12/2016, the number of SMEs accounted for 97.7% of total enterprises (GSO, 2017). The total amount of taxes paid by SMEs was about 48% of the full fee collected from the business sector (Bui, 2018). This paper examines the tax reform in Vietnam since the economic revolution up to now, the characteristic of corporate income tax (CIT) and accounting treatment of SMEs for CIT purpose.The research design is based on using qualitative research methods and combining expertise interview with studying the statements of the respondents. A survey methodology uses a sample of randomly selected SMEs in Hanoi and some provinces in the North of Vietnam.The target population comprised of 94 SMEs operating as manufacturing, trade and services firms. It was concluded that a significant number of SMEs maintain two accounting book systems. Accounting practice in SMEs is influenced strongly of accounting regimes and tax regulations. In accounting for CIT purpose, SMEs are not affected by VAS 17 and there is discordance between tax compliance and accounting for tax.

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