Tax corruption and private sector development in Vietnam

Nguyen, Ngoc Anh and Doan, Quang Hung and Tran-Nam, Binh (2017): Tax corruption and private sector development in Vietnam. Published in: eJournal of Tax Research , Vol. 15, No. 2 (December 2017): pp. 290-311.

Abstract

This article aims to examine the impact of tax corruption on private sector development in Vietnam. It is motivated by two separate but related considerations. First, despite the seriousness of the phenomenon of corruption, there is a paucity of rigorous empirical research of corruption, particularly tax corruption, in Vietnam. Secondly, ineffective control of corruption is viewed as a cause of Vietnam’s recent total factor productivity (TFP) slowdown or its poor industrial policy, both of which may hamper Vietnam’s progress as a low middle-income country. Without some understanding on the impact of tax corruption on the economy, it may not be possible to devise the most effective anti-corruption policy and measures. After a brief literature review that focuses on tax corruption, various conceptual issues relating to tax corruption are discussed and clarified. The extent of petty tax corruption in Vietnam is then discussed, followed by a review of findings and implications of recent studies on how tax corruption impacts on private sector development in Vietnam. Despite perceptions and evidence of widespread petty tax corruption, Vietnam ranks very highly both in terms of tax collection and tax effort.Not unexpectedly, the impact of tax corruption is mixed in the sense that empirical evidence lends credence to both 'sanding the wheels' and 'greasing the wheels' hypotheses. Finally, some broad policy recommendations for combating tax corruption are offered.

• Item Type: MPRA Paper
• Language: English
• Keywords: tax corruption, unofficial/informal payments, private sector, Vietnam
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H29 - Other

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