Vietnam is the most complex country in Asia Pacific for accounting and tax compliance – just beating its giant and complex neighbour, China – according to TMF Group’s inaugural Financial Complexity Index 2017.
The leading provider of global business and compliance services ranked 94 jurisdictions across Europe, the Middle East, Africa, Asia Pacific and the Americas, with 1 being most complex and 94 the least complex. Hong Kong came in at 91 as the easiest place in APAC for compliance from an accounting and tax perspective; only the Cayman Islands, BVI and UAE were ranked less complex for business across the world.
TOP 5 MOST COMPLEX JURISDICTIONS IN ASIA PACIFIC FOR ACCOUNTING AND TAX COMPLIANCE
MOST IMPORTANT COMPLIANCE TRENDS FOR APAC PROFESSIONALS
- Risk of non-compliance with local regulation: 24%
- Tax compliance (possibly of tax audits): 20%
- Accounting complexity: 16%
- Future impact of technology: 14%
- BEPS and transfer pricing: 12%
- Asia Pacific has three jurisdictions in the top 10: Vietnam (5), China (7) and India (10). Complexity around invoicing, filing and the conducting of audits is high with very specific documentation and processes applied.
- The burden of reporting creates headaches in Vietnam. Regular filings are required alongside various monthly, quarterly and semi-annual statistics reports, foreign contractor tax and VAT returns, and numerous yearly statutory reports.
- Tax is a real issue for businesses operating in Vietnam. The VAT system is very confusing and requires expertise to understand its exemptions, refunds, various VAT rates and proper filing of VAT. Businesses must correctly determine which VAT calculation method best suits the business, and ensure tax processes are followed correctly.
- Elsewhere in APAC, India places 10th globally thanks to a tax system that’s complex and multi-layered. Business leaders have a close eye on the 1 July introduction of a Goods and Services Tax (GST), established as a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India as a way to replace taxes levied by both central and state governments.
Commenting on the rankings, TMF Group’s Head of Asia Pacific Paolo Tavolato said:”Vietnam is one of the most dynamic economies in ASEAN, growing quickly and looking to claim a place as the world’s manufacturing hub – but many foreign nationals find its regulations on business unnecessary and overly burdensome.
“The government is making moves to improve this, adopting the Foreign Account Tax Compliance Act (FATCA) and working to improve and streamline the tax system. It’s also looking to gain investor confidence by bringing the Vietnam Accounting Standard and System (VAS) to be in line with the IFRS.
To download the full report please visit: tmf-group.com/FCI2017