Abstract
Employing a panel gravity model and Generalized Least Squares (GLS) estimation technique, this study documents the effect of double taxation treaties on the bilateral trade of Vietnam with ASEAN member states, thereby making an extensive comparison with its EU partner countries. Our findings indicate the significant contributions of the tax treaties to Vietnam’s trade performance, not exclusively with ASEAN but also with EU partner countries. Nevertheless, under some circumstances, the conclusion of tax treaties seems ineffective in strengthening export capacity or narrowing trade deficits for Vietnam. This is primarily due to the unidirectional movement of trade associated with tax treaty conditions, viz., imports from the advanced economies into Vietnam. Besides, the role of tax treaties as a dynamism of Vietnam’s export growth remains opaque during recent years.
Highlights
In foreign trade, the coexistence of multiple tax systems among countries generally results in the imposition of tax on a single income in two different countries
Our findings show that the significant contributions of the tax treaties to Vietnam’s trade performance, not exclusively with ASEAN and with EU partner countries
In the ASEAN region, Vietnam entered into the double taxation treaties with all member states, where the latest agreement was reached with Cambodia by the end of March 2018
Summary
In foreign trade, the coexistence of multiple tax systems among countries generally results in the imposition of tax on a single income in two different countries. Be present in several means, for example, two or more countries may levy taxes on the global income of a single taxpayer, who is identified as the resident of these countries In another case, a taxpayer’s income which is recognized to generate in the territory of multiple countries must be taxed jointly by the related governments. Over the period from 1992 to 2017, despite the successful conclusion of the tax treaties with a total of 77 trading partners, most of which are upper-middle-income and high-income economies, the benefits of the signed double taxation treaties, especially from foreign trade, to Vietnam seem negligible This stresses the importance of critically re-assessing the tax treaties’ implications for Vietnam throughout different stages of development. The rest of the paper is organised as follows: Section 2 discusses the literature review; Section 3 provides an overview of Vietnam’s tax treaty signing situation and trade activities with ASEAN; the research methodology is presented in Section 4; Section 5 analyses the main findings and discussions; the last Section is the conclusion
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