Vietnam: When will ministry dispatches stop bedeviling enterprises?

The overlapping and inconsistency of legal documents continues to make things difficult for businesses. 

Dau Anh Tuan, head of VCCI’s Legal Department, said the Vietnam Cassava Association has lodged a petition to the Prime Minister and asked for help.

The cassava industry is facing serious difficulties and may collapse as the General Taxation Department has released a document instructing taxation agencies to verify foreign clients. This has led to suspension of tax refunds for cassava export companies and VAT arrears collection.

In the document, GDT asks local taxation agencies to verify foreign customers. Meanwhile, the currently applied legal documents on VAT refunds do not require that tax refund documents must be certified by foreign customers to be eligible for a refund.

Cassava companies said that they do not have obligations or the capability to verify foreign partners when signing contracts.

Tuan said the existence of unreasonable legal documents is common. In many cases, the dispatches issued by ministries are not in line with decrees and laws, the legal documents at higher levels. Such documents cause difficulties for businessesand in some cases, even hurt entire industries.

Nguyen Dinh Cung, former Head of the Central Institute of Economic Management (CIEM), said he was worried about the “not so new” problem.

“The essence of the problem is the arbitrary way of issuing legal documents, and the way of supplying guidance through administrative documents by ministries, branches and localities. If the problem is not resolved completely, and if the Administrative Court continues to be absent, the business investment environment won’t be safe and inexpensive, and businesspeople will always be insecure as they may violate regulations,” Cung said.

With Vietnam’s legal document system, most laws, ordinances and decrees cannot be applied immediately and need legal documents at lower levels that guide implementation.

A good circular (with clear guidance, consistent with the spirit of the decrees, ordinances and laws) creates favorable conditions for production and business activities, and vice versa.

The quality of circulars affects the investment environment, and the success of institutional reform will partly depend on the quality of the legal documents.

The problem is that business environment improvement activities are mostly addressed in laws or decrees, while less attention is paid to circulars. But circulars account for the overwhelming proportion.

Over the last five years, the number of circulars account for 68 percent of total legal documents issued.. On average, one law needs 6.8 decrees, 1.8 PM’s decisions, 25.8 circulars and 1.9 inter-ministerial circulars that guide implementation of the law.

Meanwhile, enterprises find it difficult to contribute their ideas to policymakers during the compilation of legal documents. 

Tran Thuy

Source: https://vietnamnet.vn/en/business/when-will-ministry-dispatches-stop-bedeviling-enterprises-827859.html