How can Cambodia, Lao PDR, Myanmar, and Viet Nam Cope with Revenue Lost Due to AFTA Tariff Reductions?

Date: November 2002
Type: Papers and Briefs
Country:
Subject:
Series: Economics Working Papers
ISSN: 1655-5252 (print)
Author: Lao-Araya, Kanokpan

Description

In joining the Association of Southeast Asian Nations (ASEAN) and ASEAN Free Trade Area (AFTA), the governments of Cambodia, the Lao People's Democratic Republic, Myanmar, and Viet Nam have agreed to comply with the Common Effective Preferential Tariff (CEPT) Scheme, which reduces intra-ASEAN tariff rates on certain imports and may likely reduce government revenue.

This study proposes tax structure and tax administration reforms and other complementary policies that these governments can introduce to safeguard and enhance revenue collection. First, they can strategically allocate goods among the four CEPT scheme lists. Second, the new member countries can improve their tax systems by replacing traditional general sales taxes with Value Added Tax and generally simplifying their tax structures. Third, they can reduce inefficiencies that impede tax collection by improving tax administration institutions and tools. Finally, they can improve their overall legal systems so as to discourage tax avoidance and evasion and reduce corruption among tax officials.

Contents

  • Abstract
  • Introduction
  • Taxation in Developing Countries
  • Impacts of CEPT Agreements
  • Tax Reforms
  • Conclusions
  • Selected References