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VIETNAM ACADEMY OF SOCIAL SCIENCES GRADUATE ACADEMY OF SOCIAL SCIENCES TRAN NGOC LINH TAX MANAGEMENT OF FOREIGN DIRECT INVESTMENT ENTERPRISES IN HO CHI MINH CITY Major: Economic Management Code : 9.34.04.10 SUMMARY OF ECONOMIC DOCTORAL THESIS HA NOI – 2022 The work was completed at : VIETNAM ACADEMY OF SOCIAL SCIENCES GRADUATE ACADEMY OF SOCIAL SCIENCES Scientific Supervisors: Assoc Prof, Dr Mai Thi Hoang Minh Assoc Prof, Dr Quach Duc Phap Review 1: Prof, Dr Do Duc Binh Review 2: Assoc Prof, Dr Nguyen Thi Nguyet Review 3: Assoc Prof, Dr Bui Quang Tuan The thesis will be defended at the Academy-level Thesis Judging Council, Graduate Academy of Social Sciences, 477 Nguyen Trai St, Thanh Xuan Dist, HaNoi City At ……., , th , 2022 Specifically, find out the thesis at : - National library - Graduate Academy of Social Sciences’s library PREFACE The urgency of the research Tax management of foreign-invested enterprises (FDI enterprises) is always a interesting research There are many academic and realistic evidences that the developing countries’s tax administration for FDI enterprises is under the expectations, including Vietnam, which is a country with limited capabitity in tax management respond to sophisticated tax planning strategies of multinational corporations (MNEs) for tax evasion, leading to tax loss of countries Accordingly, the research topic comes from both perspectives: (1) Realistic status and (2 Research gaps In terms of realtistic status: In Vietnam, Tax management for FDI enterprises has not been effectively implemented as well as controlled tax compliance in recent years1 Because many FDI enterprises have filled fiscal year of corporation income tax in losses continuously for years, In spite of growing their business activities, they have caused loss of tax revenue and competed unfairly with others2 Research context: With the trendy financial autonomy, local authorities have improved incentive conditions for FDI to stimulate economic growth and towards development, but tax management for FDI sector must be ensured effectively and efficiently Therefore, researching tax management for FDI sector in Ho Chi Minh City is a significant theme in nowaday phase All of those are mentioned above, I definitely choose the topic “Tax Management of Foreign Direct Investment Enterprises in Ho Chi Minh City”as a research theme Research objectives and implementation 2.1 Research objectives The objective of the thesis is to study theoretical and status of tax administration for FDI enterprises, and to improve the efficiency of tax management for FDI enterprises in a regional tax authority The research questions needs to solve include: (1) What are the Viet Nam Institute for Economic and Policy Research ( VEPR) (2020), Tax Avoidance and Evasion in VietNam- Corporate Income Tax case Study, The research of VATJ – pp 67-68 Researchs of : Nguyen Tuan Anh (2020) and Nguyen Dai Thang (2016) differences in tax administration for FDI enterprises need to be focused?; (2) What is the status of tax management for FDI sector in Ho Chi Minh City?; (3) What factors impact the efficiency of tax management for FDI sector in Ho Chi Minh City?; (4) What recommendations and solutions enhance tax management for FDI enterprises in Ho Chi Minh City? 2.2 Research contents The specific research tasks are as follows: - Commentary and overview of relevant studies, OECD recommendations, BEPS program on tax management for FDI enterprises - Assess the effectiveness of tax management for FDI sector in Ho Chi Minh City Tax Department This is used as the basis for identifying tax administration’s drawbacks and causes; Based on assessing results is to empirically analyse factors that impact on the tax management effectiveness for FDI sector in Ho Chi Minh City - Propose recommendations and solutions to improve tax management effectiveness for FDI sector in Ho Chi Minh City Research objects and scopes 3.1 Research objects The research object is the theories, status of tax administration and management’s effectiveness for FDI sector in Ho Chi Minh City 3.2 Research scope - Content scope : Study FDI sector tax management status of the Ho Chi Minh City Tax Department, focus on vulnerable revenue resourses that are because of FDI sector tax avoidance strategies - Spatial range: Study of FDI sector tax management of The Ho Chi Minh City Tax Department - Time range: Primary data was gathered from July 2019 to December 2019, while state authorities' data was gathered during a sixyear period (2015-2020) Methodology and research methods 4.1 Methodology Analysis and assessment of the FDI sector tax management status is based on the dialectical materialism and used a combination of qualitative and quantitative research approaches, 4.2 Detailed research methods The author used a combination of main research methods such as: - Qualitative methods: Synthesize and analyse from related research works, secondary data of documents and reports from the General Statistics Office, Ho Chi Minh city Statistics Office, the General Department of Taxation and the Ho Chi Minh City Tax Department as well as methods of consultation and interview, descriptive statistics - Quantitative methods: estimate and assess the reliability of the scale by Cronbach's Alpha coefficient, exploratory factor analysis (EFA) and regression analysis New contributions of the thesis - Systematize the theories of FDI sector tax administration, and specify the features of FDI businesses tax administration - Assess the effectiveness of FDI sector tax management in Ho Chi Minh City by using the Expanded Program Logic Model Sequence (EPLMS) of the OECD (2008), identify drawbacks and the causes of them in tax management; Besides, empirical evaluation of factors affecting effectiveness of FDI sector tax management - Propose recommendations and solutions to improve the effectiveness of FDI sector tax management in Ho Chi Minh City Theorical and realistic implications of the thesis - In theory: Systematize theoretical overviews of FDI sector tax management, recommendations and proposals of the OECD, the BEPS program Identify the characteristics of FDI sector tax administration - In practice: with results of state’s analysis and evaluation, recommendations, proposed solutions of FDI sector tax management, the thesis is expected to bring a valueable reference for tax authorities in tax administration of FDI enterprises Thesis structure The thesis is divided into segments in addition to the preface Chapter 1: Overiew of research works related to the topic Chapter 2: Theoretical and practical foundations on tax administration and management of FDI Chapter 3: Research methodology Chapter 4: Status and assessment of factors impact to tax management’s effectiveness for FDI sector in Ho Chi Minh City Chapter 5: Recommendations and solutions to improve the FDI sector's tax management effectively in Ho Chi Minh City CHAPTER OVERVIEW OF RESEARCH WORKS RELATED TO THE TOPIC 1.1 Reviewing researches on tax management efficiency, the relationship between tax administration and tax compliance of taxpayers: There are 04 related works: Ott (1998) in Croatia, Zhiyong and Brondolo (2017) in Croatia China, Apollo (2017) in Uganda, and Bui Thi Thu Thao (2020) in HCMC (Vietnam); The summary results are: Tax management efficiency is considered an important measure of tax administration reform and the efficiency of tax authorities has closely related to tax compliance as well as tax administration’s activities 1.2 Reviewing on tax management studies for FDI firms: (1) Some studies focused on researching FDI sector tax avoidance strategies, challenges in tax administration for FDI enterprises of countries, and proposed tax managing actions to control effectively and efficiently of FDI sector, such as: Krautheim and Schmidt (2011), Klassen et al (2017); Report “Action Plan on Base Erosion and Profit Shifting” of the OECD (2013); Report “Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration” of the OECD (2017) ,…; These studies evaluated the influence of complicated tax avoidance strategies of FDI sector that have caused tax revenue losses for countries such as: Bolwijn et al (2018); Crivelli et al (2015), Cobham & Janský (2018); T K Tran (2021) with the case of Southeast Asian countries (2) The researches aimed for exploring the factors affecting the tax administration effectiveness , such as: Benk et al (2016), Stephen et al (2017), Thanh, S D et al (2014) , Nzotta (2007), Choi, Y J (2001) and OECD (2011); It was affirmed that the tax administration effectiveness depended on how the tax authority is organized, applied to information technology in order to save costs, and tax management must pay much attention to issues such as: community sense, training tax officers and their integrity, morality, etc (3) Studies of the factors impacted on tax administration in Vietnam, there are cases, such as Bui Van Nam and Le Thi Chinh (2017), Le Quoc Hieu and Phan Thi My Dung (2015), Nguyen Thi Mai Dung (2018), Tran Thi Hong An (2008), Mai Thi Lan Huong and Le Dinh Hai (2018),… These results could identify some factors affecting tax management of FDI enterprises in Vietnam as: Institution and tax policies, qualifications of tax authorities and tax officers, tax administration structure and processes - physical and technical bases of tax authorities, tax management information systems and public applicability Information technology in tax administration, tax service activities, tax audits (4) Some studies aimed for analyzing the current status of tax administration for FDI enterprises, in which the problem of high tax risk for sectors is the control of transfer pricing transactions filling tax There were typical researches, such as Salihu et al (2015) in Malaysia, Masri et al (2019) in Malaysia and Indonesia, Zhang et al (2019) in China Besides, there were some domestic researches, Do Thien Anh Tuan (2014), Duong Van An (2016), Nguyen Dai Thang (2016), Le Thanh Ha (2017), Nguyen Tuan Anh (2020), for example All of studies emphasize the tax avoidance strategies fulfilled by FDI enterprises that have been usual and inevitable Base on their scale of international operations, they have optimized tax strategies to avoid taxes in both recipients and invested-countries Those studies have been definite tax administration for FDI enterprises is tax risks management of almost transfer pricing transactions of from tax fillings to tax audits 1.3 Overview of previous researches 1.3.1 Overview On the basic theories of tax administration for FDI enterprises of previous studies pointed out the difficulties and complexities in tax administration for them These studies discussed guidelines and recommendations to improve tax administration efficiency for them in different countries In practical terms, these studies above have analyzed the status of tax administration for FDI enterprises in Vietnam as well as others and all have focused on the contents to transfer pricing controls, FDI enterprises’s tax avoidance and evasion preventions; Im the end, these studies have proposed tax management solutions to control and limit these behaviors; Therefore, analyzing transfer pricing behaviors of FDI enterprises is the essential theme of tax management of FDI enterprises 1.3.2 Research gaps As results of previous studies review, there are research gaps to be cleared up and summarized as follows: Firstly, they had not shown the difference between tax administration in general and the challenges of tax administration for FDI enterprises Secondly, there have been very few studies to analyze the status and evaluate the effectiveness of tax administration for FDI enterprises base on the theoretical research model Third, there have not been many studies conducted inquiries and surveys with tax officials Therefore, some former solutions were difficult to implement and amend in realities Fourthly, base on the researcher's knowledge limitation, there were only 02 studies on tax management for local FDI3 enterprises in Viet Nam Therefore, research at the local level will suggest specific and relevant solutions to local realities; Accordingly, it is necessary to study tax management for FDI enterprises in Ho Chi Minh City CHAPTER THEORETICAL AND PRACTICAL FOUNDATIONS ON TAX ADMINISTRATION AND MANAGEMENT OF FDI 2.1 Key concepts 2.1.1 Tax Administration 2.1.1.1 The concept of tax administration 2.1.1.2 The effectiveness of tax administration 2.1.1.3 Basic characteristics of tax administration 2.1.1.4 The role of tax administration The effectiveness of tax collection is significantly influenced by tax management The effectiveness of tax administration makes ensuring that the tax collected is constant, concentrated, predictable, and steady Taxpayer compliance is ensured through efficient tax management 2.1.1.5 Tax administration principles The fundamental guidelines that tax officials must adhere to are: respect for the law; transparency; a focus on efficiency in tax management; modernization of information technology; Each nation's tax administration must adhere to international tax norms, regulations, and procedures 2.1.1.6 Main contents of tax administration Four core topics comprise the majority of tax administration: tax Nguyen Dai Thang (2016) in Vinh Phuc and Nguyen Tuan Anh (2020) in Ha Noi services and propaganda; tax registration- declaration; management of tax law violations prevention (control, audit, fine, settlement of complaints and denunciations); debt management and tax debt enforcement 2.1.2 FDI businesses 2.1.2.1 Foreign Direct Investment – FDI 2.1.2.2 Definition of FDI enterprises (According to Article of Viet Nam Law on Investment) 2.1.2.3 Characteristics of FDI enterprises (1) FDI businesses frequently belong to MNEs (2) Due to their extensive expertise conducting business on the global market, FDI businesses are difficult to manage and must employ a variety of sophisticated tactics to deal with the authorities (3) The attribution It can be quite difficult to calculate expenditures and revenues to market value 2.1.2.4 The roles of FDI enterprises 2.2 Tax administration for FDI enterprises Tax management for FDI enterprises is a subset of tax management generally, and it also includes the four core tax management components: services and propaganda, tax registrationdeclaration, management of tax law violations prevention, and tax debt administration- debt enforcement, but only for FDI sector taxpayers According to earlier studies, FDI enterprises have broad, varied, and intricate operations, a good governance framework, qualified human resources, and a wealth of tax knowledge … Therefore, FDI corporations performed well in terms of form for tax management components; nevertheless, given their advantages, FDI enterprises frequently employ complex tax avoidance tactics to benefit from taxes, based on Wang et al (2020) The author, like in other studies, concentrates on identifying, controlling, and preventing illegal profit transfer behaviors while also analyzing the elements of tax management related to FDI enterprises' anti-transfer pricing behaviors 2.2.1 Setting of a legal framework and guiding documents to recognize, manage, and restrict FDI businesses' illegal profit transfer behaviors 2.2.1.1 Identify illegal profit transfer behaviors of FDI enterprises 2.2.1.2 Control and restrict FDI businesses' illegal profit-transfer practices a According to BEPS, Decree 20/2017/ND-CP, and Circular 41/2018/TT-BTC, there are five transfer pricing methodologies and appraisal procedures b Setting of auditing and controlling punishments for any infractions of the law on transfer pricing 2.2.2 Completing the prices of related-party transactions database 2.2.3 Strengthening international collaboration and information exchange 2.2.4 Assembling a team of highly specialized human resources to manage FDI corporation taxes 2.2.5 Enhancing controls and audits of FDI businesses' transfer pricing activities 2.3 Assess the effectiveness of tax administration for FDI enterprises The Expanded Program Logic Model Sequence (EPLMS), enhanced by the OECD (2008), is used to diagnose and assess the efficiency of tax management FDI corporation in HCMC 2.4 Experiences of some countries on tax management for FDI enterprises Chapter Summary CHAPTER RESEARCH METHODOLOGY 3.1 Framework for theory-based study and implementation of the Expanded Program Logic Model Sequence to tax management assessment for FDI firms 3.1.1 The Expanded Program Logic Model Sequence OECD (2008) created the "Extended Program Logic Model Sequence" (EPLMS) to assess and gauge the efficiency of tax administration of FDI businesses at a management organization known as the Department of Taxation HCM City 3.1.2 Application of the "Extended Program Logic Model Sequence" in managing FDI corporation tax H1: The autonomy of tax authorities has a favorable impact on the tax management efficiency for FDI enterprises in HCM City H2: The IT system used by the tax authorities improves the efficiency for FDI firms tax management in HCM City H3: Tax management effectiveness for FDI businesses in Ho Chi Minh City is positively impacted by tax audit efficiency H4: The efficiency for FDI businesses tax management in HCM City is positively impacted by tax propaganda H5: Motivation and incentives have a positive effect on tax administration efficiency for FDI enterprises in HCMC H6: The tax management efficiency for FDI enterprises in HCM City is positively impacted by perceived levels of corruption (or anticorruption) Diagram 3.3: Model of factors affecting the efficiency of tax management for FDI enterprises Source: Founded by the author 3.4 The process of assessing the factors affecting the efficiency of tax management for FDI businesses in HCM City To strengthen the arguments, the author explores the factors affecting tax administration and empirically assesses the impact of 06 factors on tax management efficiency for FDI enterprises in HCM City, and uses qualitative and quantitative analysis to support research objectives The following steps were taken in the research process: 11 Diagram 3.4: Steps to assess the factors affecting tax management efficiency Source: Founded by the author 3.4.1 Qualitative analysis 3.4.2 Quantitative analysis Conduct a survey to determine the factors influencing the efficiency of tax administration for FDI businesses in HCM City; According to Hoang Trong and Chu Nguyen Mong Ngoc (2008), satisfactory results with a sample size of 359/360 surveyed tax officers and have appropriate responses forwarded (the research model includes 25 observed variables, the minimum sample size of the research topic is at least 250 observations) Data analysis methods: 12 a Utilize the Cronbach's Alpha coefficient to assess the scale's reliability b Exploratory factor analysis (EFA): Indicators to consider when analyzing test results from EFA analysis: KMO test; Bartlett's test of sphericity; Eigenvalue criteria; Total Variance Extracted (TVE); Factor Loading c Linear regression analysis: Used to test the linear correlation between the variables in the model, between the independent and the dependent variable Use regression techniques based on the least-squares estimate (OLS); The Likert scale for all of the variables ranges from to 5, and the bigger the estimated coefficient, the stronger the influence of the independent variables on the dependent variable In addition, the following criteria are used in the analysis: + The adjusted R-Squared is the coefficient showing the variation of knowledge sharing behavior explained by observed variables in order to estimate and test the model’s congruence with the data + F test (with sig value) to assess the overall linear regression model’s congruence + Using the beta estimation coefficient, determine the extent to which the independent variables have an impact on the dependent variable Chapter Summary CHAPTER STATUS AND ASSESSMENT OF FACTORS IMPACT TO TAX MANAGEMENT’S EFFECTIVENESS FOR FDI SECTOR IN HO CHI MINH CITY 4.1 Status of FDI sector tax administration in HCM City 4.1.1 FDI enterprises overview in HCM City Up until December 31, 2020, there were approximately 10,648 FDI businesses in HCM City (out of a total of 259,185 independent accounting businesses), with 3,066 of those businesses accounting for 28.56%5 of the total HCM City's Tax Department's Center for Integration & Storage of Taxpayer Information, 2020 13 4.1.2 Tax administration for FDI enterprises in HCM City 4.1.2.1 Organizational structure of HCM City Tax Department 4.1.2.2 Tax filings of FDI sector in HCM City Regarding the rate of filing tax returns and the rate of filing tax returns on time terms from 2015 to 2020: these two rates of the FDI sector werw both over 95% on average, higher than the percentages for both public and private businesses, and higher than the average for the HCM City Tax Department as a whole 4.1.2.3 Tax debts of FDI sector in HCM City In general, the FDI sector's tax debt ratio had been the lowest among industries and less than the average tax debt ratio of the entire HCM City Tax Department over the years, demonstrating the FDI sector's compliance with tax debt payment requirements The average ratio of tax debt to total tax revenue of FDI enterprises in the period of 2014 to 2020 was 3.8% on average, less than 5% 4.1.2.4 Revenue for FDI sector in HCM City's budget Between 2015 and 2020, FDI firms' revenues as a percentage of overall HCMC revenues fluctuated from 26.3% in 2015 to 27.72% in 2018 and gradually decreased to 24.79% in 2020 Corporate income tax was the largest revenues source, making up 33% to 40% of all taxes collected by this FDI sector 4.1.2.5 Tax controlling and auditing tasks for FDI sector in HCM City The amount of tax controlling and auditing has gradually increased over time, but it has remained low in comparison to other entities and did not exceed 10% of all controlled and audited enterprises between 2015 and 2020; this demonstrated that tax controlling and auditing for the FDI sector has been more difficult than that of other sectors Tax authorities significantly reduced the amount of business loss, according to the findings of tax controlling and auditing This may be considered one of the most blatant indicators of illegal transfer pricing and tax avoidance activities in the FDI sector 4.1.2.6 Limitations in tax administration for FDI sector in HCM City Tax Department There are still limitations and shortcomings of tax administration: commercial fraud; tax administration for illegal transfer pricing activities; tax management for tax evasion, fraud, tax debts 14 4.2 Results of assessing the effectiveness of FDI sector tax management Using the survey data, the EPLMS model was used to evaluate the condition of tax management and identify the areas where the tax authorities needed to improve, particularly in the following categories: 4.2.1 Tax management inputs for FDI sector 4.2.1.1 Environment of tax management for FDI sector a Economic environment: tax revenue from the FDI sector has increased, but this growth has been primarily attributable to the high level of new FDI capital, not to the performance of FDI enterprises; cross-border information exchange has been still limited, and the tax authorities lacked the necessary technical capacity to handle the scope and sophistication of FDI enterprises' international business transactions b Fiscal policy: The growth in capital size and size of FDI sector has not been commensurate with the government's revenue target c Legal framework: Tax authorities' ability to gather information on taxpayer transactions and other activities has been constrained, which have reduced the effectiveness of tax management, raises the cost of tax compliance, and probably chance to corruption d Tax administration enforcement: The government needs to assist the tax sector in implementing the tax laws; Political commitments to tax innovation are a key environmental variable in efforts to modernize the tax system This calls for a strong commitment at higher levels of government and extensive modifications to increase the operational effectiveness of tax authorities e The impact of other governmental entities : There are corrupt acts in tax administration for FDI enterprises related to other public organizations The assistance of other public authorities for tax authorities to carry out tax administration for FDI firms has not been favorable f Financial and Banking organizations: Their performances provide timely and compliant services with legislation The process to modernize tax administration through e-taxing payments, and tax authorities use and support tax services in advance for FDI businesses g Taxpayers compliance awareness: FDI businesses are fully aware of tax risks and expenses if they fail to pay their taxes In general, the FDI sector majority has a solid understanding of the tax laws's 15 requirements for practices and content However, given their tax avoidance behavior, FDI businesses engage in sophisticated tax evasion In case of FDI sector evade and avoid taxes on purpose, it is difficult for the tax authorities to control or audit 4.2.1.2 Tax management resources a Financial resources: To administer taxes for FDI sector, tax authorities have been inadequate financial resources b Human resources: The amount and quality of human resources needed to administer taxes for FDI sector has been inadequate c Intangible resources: The tax authorities' moral character and readiness to use their authority have been only average 4.2.1.3 History of tax administration Events from the past had a big impact on how well tax officials are able to administer taxes nowadays 4.2.1.4 Tax management strategy The plans of the tax authorities not fully represent the tax administration goal for FDI sector; The strategic plan for tax management for FDI businesses' goals has not been entirely apparent; and have not employed efficient methods to monitor if FDI businesses have not complied with the law and avoided taxes 4.2.2 Handling of tax management transformation 4.2.2.1 Formal structure of an organization - The organizational structure used to administer taxes for FDI fsector has been inadequate; current rules and regulations have not produced favorable conditions for effective tax management for FDI enterprises; In general, FDI sector's tax management implementation procedures have been ineffective - The use of IT in tax management has been inefficient; the staff's level and capacity in this area has been low; the database was tiny and there was no connection to other industries; the necessary data for FDI sector's tax management has not yet prepared to handle the workload - The organization's system for allocating tasks to units and resources have been still unreasonable, inadequate for dealing with workload, task complexity, and strategic priorities 4.2.2.2 Informal arrangement organizations, or culture of the organizations 4.2.2.3 Organizational tasks 16 The HCM City Tax Department have not had a high level of participation in the development of strategies, planning, budgeting, and resource allocation for FDI sector’s tax administration; the coordination and relationship-building between tax authority departments and other related units outside the organization has been also lacking, which may limit the effectiveness of tax management due to poor coordination with tax authority and other public organizations The average internal control capability of tax authority have made it difficult to avoid tax authority corruption; also, the capacity of tax authority to gather data on taxable transactions for FDI businesses has been insignificant 4.2.2.4 Organization individuals Tax administration qualifications of HCM City tax officials have been only sufficient for tax administration tasks for FDI sectror 4.2.3 Outputs of tax management The outputs are the result of management functions on taxes into practice as required by laws, including: tax debts management, processing tax filings, controlling and auditing 4.3 Findings from an evaluation of factors impact on tax management efficiency for FDI sector in HCM City 4.3.1 Description of the study sample 359 tax officers responded to the questionnaire survey in a way that matched the study's requirements 4.3.2 Overview results on factors impact on tax management efficiency of FDI sector in HCM City 4.3.2.1 Tax authority’ autonomy in tax management of FDI sector: (1) There was no consistency within the enrollment dismissal process in the units beneath the HCM City Tax Department; (2) The autonomy in tax administration structure and intervention from other political entities in tax administration varied amongst units within the HCM City Tax Department (3) One of the causes that decreased the effectiveness of FDI sector tax management was the tax authority' restricted autonomy on crucial FDI sector tax management concerns 4.3.2.2 Controlling and auditing FDI sector in tax management The tax authority focused on resolving tax evasion, avoidance, and non-compliance with tax regulations from taxpayers, proving that 17 tax audit has had a positive impact on the effectiveness of tax management and improved the tax compliance consciousness of FDI enterprises The tax authority always strictly implemented tax auditing to ensure the plan was always achieved 4.3.2.3 FDI sector tax management in using information technology (IT) The indicator "The tax sector information technology system connects and updates data and exchanges information with other agencies in service of tax administration for FDI sector" (CNTT 5) has been the lowest average of 2.67 and a StD higher 1, which reflects the lack of database connection, inter-sectoral data update, regulations on coordination, exploitation, and data mining processes in the Vietnam FDI sector tax management and in HCM City Controlling and auditing transfer pricing in the FDI industry has proven challenging.This outcome has been in line with prior researches, the Ministry of Finance's assessment of the state of IT application in tax administration From the contents to modernize IT and human resources to apply IT to tax administration, especially for FDI sector the OECD, the strategy of modernizing Vietnam's tax system to 2030, ; Enhancing IT application, improving the level of updating, managing and exploiting IT in tax administration of FDI enterprises is further promoted to be suitable for the digital economy and towards digital government in today's era 4.3.2.4 Propaganda – Education on tax laws for FDI sector in HCM City Propaganda and education on tax regulations have impacted positively on FDI sector tax management effectiveness (mean abslightly over 3.6 and StD about 0.8) 4.3.2.5 Motivating and encouraging of HCM City Tax Department Motivating and encouraging employees has impacted positively on the FDI sector tax management effectiveness; The level of remuneration and motivation for employees to work at the tax authority need to be improved 4.3.2.6 Anti-corruption task of HCM City Tax Department The study's findings demonstrated that most evaluation criteria had good average scores with moderate StDs (the lowest mean score was higher than 3.4, and the maximum StD was not more than 0.91).This findings was demonstrated that the anti-corruption efforts of the tax authority had significantly influenced taxpayer trust and self-compliance, increasing the efficiency of tax management 18 4.3.3 Assessing the impact of factors on the efficiency of FDI sector tax management in HCM City 4.3.3.1 Adjusted application model After completing the procedures of evaluating the scale and EFA, the analytical findings have extracted influencing factors from the primary model; The auditing and propaganda components were combined into one factor (auditing-propaganda -TTTT) Therefore, the research hypotheses (H1, H2, H3, H4, and H5) have all had the same impact on the dependent variable tax management effectiveness, and the amended theoretical model has been revised as follows: 4.3.3.2 Regression analysis According to the regression results, Thera were significant factors; In which, the anti-corruption factor (PCTN) had the strongest influence on the effectiveness of FDI sector tax management, with a regression coefficient of 0.268, followed by motivation (DLKL): 0.146, autonomy (QTC): 0.082, propaganda-auditing (TTTT): 0.114.This was how the linear regression equation appeared: HQQLT = 1.197 + 0.082*QTC + 0.114*TTTT + 0.268*PCTN + 0.146*DLKL In line with the predictions of the theoretical research model, the analysis results of the linear regression equation demonstrated that the 19 influencing factors in this on the influence in the direction were directly proportionate to the dependent variable 4.4 Conclusion 4.4.1 Overview of the theoretical foundations and previous studies The following are some contents that FDI sector tax management should be concentrated: (1) Creating a legal framework and guiding documents to identify, regulate, and restrict FDI enterprises' profit transfer activities (2) Updating and completing the price database (3) Increase international cooperation and information exchange (4) Assembling a group of highly qualified human resources for FDI sector' tax administration (5) Strengthening controls and audits of FDI businesses' transfer pricing 4.4.2 Based on the findings of tax management efficiency assessment for FDI sector in HCM City To enhance tax management efficiency for FDI firms, the following restrictions from the assessment of tax administration efficiency need to be handled and adjusted: 4.4.2.1 Limitations caused by inputs a The environment for tax management's limitations : The growth rate of HCM City's FDI capital has been incompatible with the tax revenue from FDI sector;The tax authority has lacked the necessary technical competence to handle the scale and sophistication of international commercial transactions of FDI sector; The tax authority's right to enforce tax laws has been insufficient to manage taxes for FDI firms in an efficient manner; Penalties have been insufficient to prevent them from breaking the rules; and tax avoidances and evasion practices of them have been highly complex, making it challenging for tax authority to monitor them b Limits of tax management resources : In terms of quantity and quality of tax officers, human resources have not been adequately equipped; the tax authority has not recognized the value of tax administration for FDI sector in comparison to tax administration for other business kinds In the administration of taxes for FDI sector, tax officers have not acted yet honestly and fairly c Limitations based on tax management history : Tax management effectiveness has been impacted by the rapid change in tax administration, the increase in the number of taxpayers, and corruption 20 scandals d The tax management strategy's limitations : The goals and vision in tax management for FDI sector have not been consistent with reality 4.4.2.2 Limitations due to processing issues in tax administration transformation a Organizational tasks: The tax authority's efforts to forge links with the external relationships have been under expectation; The tax authority's internal controls and anti-corruption capabilities have not been particularly effective It has not been easy for the tax office to get data on taxable transactions for FDI businesses b Formal organizational arrangement: The divisions within the organization that handle tax administration for the FDI sector have not been transparently and clearly defined in terms of their roles, authority, and responsibilities; Allocation of financial, human and material resources for tax administration for FDI setor has not been appropriate c Informal organization arrangement : Particularly in the use of information technology and updating the database for coordination between state administration sectors, and the exchange of tax information on FDI enterprises between other countries' tax authorities, the tax authority's capacity to gather information on taxable transactions for FDI enterprises was inefficient 4.4.2.3 The output factors' limitations : The relevance of the outputs of management levels from the whole organization level, the unit level to the individual level has been only average, and needs to be improved 4.4.3 Using the findings of the assessment of the impact factors on the tax management effectiveness for FDI sector in HCM City According to the results of an empirical evaluation, the effectiveness of tax management for the FDI sector was influenced by four groups of factors, including autonomy (QTC), propaganda and auditing (TTTT), anti-corruption (PCTN), and motivation (DLKL); In which, "Anti-corruption" factor was the greatest impact This was an unexpected result in the survey conducted by the HCM City Tax Department’ officials Chapter Summary 21 CHAPTER RECOMMENDATIONS AND SOLUTIONS TO IMPROVE THE FDI SECTOR’S TAX MANAGEMENT EFFECTIVELY IN HO CHI MINH CITY 5.1 Ideas and orientations to improve the FDI sector tax management 5.1.1 Ideas Vietnamese tax administration system has been established deliberately with a modern, professional, efficient, integrity in accordance with international regulations Institutions, human resources, and information technology must serve as the three major foundations of tax administration renovations 5.1.2 Orientations - Develop a modern, streamlined, effective, and efficient tax authority by adopting further improvements The focus of tax administration is based on the electronic tax platform and three primary foundations: Management institution is filled, synchronous, innovative, and integrated; Professional, authentic, innovative human resources; Modernized, integrated information technology to match tax management requirements in the context of the digital economy - In the years 2021–2030, continue to improve on a solid information technology foundation in order to automatically process, analyze big data and provide complete and extensive services for tax management - Completing tax administration regulations synchronously and transparently is based on applying the uniform tax risks management in all tax administration operations - Enhance the effectiveness of the organizational structure, the effectiveness and efficiency of the internal control system, warn of, identify, and deal with all behaviours and acts of corruption 5.2 Proposal recommendations and solutions 5.2.1 Recommendations for superior authorities (1) Specifically, FDI sector’s policies and conditions for tax incentives should be reviewed, supplemented, and completed Modern, automatic, and efficient FDI sector tax management is ensured by 22 comprehensive database and information technology (2) Completing the tax regulations and legislative documents in order to establish a solid legal framework that would support FDI sector' tax administration needs (3) The tax revenue target should be in accordance with the proportion of FDI sector’ capital scale and increasing numbers (4) The HCM City Tax Department's autonomy in managing taxes for the FDI sector is being further increased (5) Adding appropriate human and financial resources so that the local tax authorities have what they need to handle FDI sectoe in an efficient manner 5.2.2 Solutions for Ho Chi Minh City Tax Department (1) Clearly and transparently reorganize the tax department's organizational structure (2) Enhance the tax authority's capacity to gather data on FDI sector tax-generating transactions Complete the transaction price database to improve collaboration and cross-border information sharing (3) Effectively implement contemporary risk management methods and techniques for FDI sector tax management (4) Reinforce FDI sector profit transfer activities' tax audit and control (5) Promote anti-corruption efforts and devise a fair incentive system for tax officers (6) Criteria for assessing tasks completion (output appropriateness) of management levels should be reasonably determined CONCLUSION In order to evaluate the performance of tax management for FDI sector at the local level, particularly in Ho Chi Minh City, the study integrates theoretical and practical issues Based on this, the thesis presents suggestions that are realistic and aimed at improving the effectiveness of tax management for the FDI sector in Ho Chi Minh City According to the Extended Program Logic Model Sequence (EPLMS) theoretical framework, the study has provided a model to assess the efficiency of tax management for FDI sector in Ho Chi Minh City, identifying status issues (weaknesses) that must be addressed and fixed for tax management to be most effective 23 The study has provided a model to evaluate the effectiveness of tax administration for FDI enterprises in Ho Chi Minh City according to the theoretical framework of the Extended Program Logic Model Sequence (EPLMS), identifying existing problems (weaknesses) need to be addressed and corrected for tax management to be most effective Determine the factors that have a major beneficial impact on tax management effectiveness in the FDI sector, ranking them in order of impact, as follows: anti-corruption (PCTN), motivation (DLKL), propaganda-audit (TTTT), and agency autonomy tax (QTC) From the results of this study and the recommendations of previous studies, the OECD, the BEPS Program, serve as the basis for proposing recommendations and some solutions to improve the effectiveness of FDI sector tax management in Ho Chi Minh City in accordance with the orientation "Strategy for reforming the tax system to 2030" in Decision No 508/QD-TTg dated April 23, 2022 of the Prime Minister, specifically: - Recommendations for superior authorities.: - Solutions for The Ho Chi Minh CityTax Department As a result, the study's suggestions and solutions may be proposed as follows: (a) Regarding the content: From tax filing to tax auditing, the emphasis is on controlling the illegal transfer pricing of FDI enterprises with related-party transactions in order to prevent tax revenue loss effectively and efficiently and to significantly improve FDI taxpayer self-compliance and reducing tax compliance management costs for tax authorities (b) Internal management : Because, in the end, the human is the most significant factor in all activities of an organization, from designing and issuing policies and regulations to organizational structure and professional activities, it is important that tax authorities strengthen their anti-corruption capacity in all aspects of tax administration activities and for FDI sector in particular - 24 AUTHOR WORKS PUBLISHED Tran Ngoc Linh (2016), "Tax Authorities will carry out tax auditing and controlling enterprises about18% in 2016", Viet Nam Taxation Magazine, No 11 (578) March 17th , 2016, pp.4-5; ISSN 1859-0756 Tran Ngoc Linh (2016), "Transfer pricing of FDI enterprises in Ho Chi Minh City”, Review of Regional Sustainable Development, Term 6- No 2- June, 2016, pp 45-53; ISSN 2354-0729 Tran Ngoc Linh (2016), "Emulate corporate income tax reduction to the minimum", Viet Nam Taxation Magazine, No 51 (618) December 22nd, 2016, pp.7; ISSN 1859-0756 Tran Ngoc Linh (2017), "Vietnam faces the risk of reducing revenue from tax agreements", Viet Nam Taxation Magazine, No 27 (646) July 06th, 2017, pp 6; ISSN 1859-0756 Tran Ngoc Linh (2017), "New regulations on related-party transactions and anti-transfer pricing", Viet Nam Taxation Magazine, No 31 (650) August 03th , 2017, pp.26-28; ISSN 1859-0756 Tran Ngoc Linh (2018), "Anti-transfer pricing management still faces many challenges", Viet Nam Taxation Magazine, No 21 (692) May 24th, 2018, pp.10-11; ISSN 1859-0756 Dr Tran Trung Kien, Tran Ngoc Linh (2019), "Tax Base Erosion and Profit Shifting (BEPS) and sources of tax revenue: Analysis from Southeast Asian countries”, University Science topics, Code: CS-201804, University of Economics of Ho Chi Minh city, passed by Dec 04th, 2019 Tran Ngoc Linh, Nguyen Manh Phuc (2021), “Status of compliance with regulations on transfer pricing documents of FDI enterprises in Viet Nam", Review of Finance, term – November, 2021 (764), pp.6568; ISSN 2615-8973 Tran Ngoc Linh (2022), “Factors affecting the effectiveness of tax administration for foreign- invested enterprises in Ho Chi Minh City”, Political Science Magazine, No 03/2022, pp.80-88; ISSN 1859-0187 10 Tran Ngoc Linh (2022), “Theoretical foundations of tax administration for foreign-invested enterprises”, Review of Corporate Finance, No 04/2022, pp.28-32; ISSN 1859-3887