public finance

Keeping up with Growth: Building a Modern Tax Administration in Vietnam, 2004-2015

Leon Schreiber
Focus Area(s)
Country of Reform

As Vietnam gradually became a middle-income country during the early 2000s, its tax agency struggled to keep up. In the decade and a half following the Communist Party–led government’s 1986 decision to establish a market-based economy, local entrepreneurs launched businesses, foreign investors poured into the country, and the average annual rate of economic growth soared to 7.5%. But during the same period, tax revenues declined as the General Department of Taxation (GDT), which previously collected almost all of the country’s taxes from a small group of state-owned enterprises, strove to keep pace with the economic dynamism. In 2004, the department established an internal reform team and adopted a strategy to make sure those who could pay covered their fair share of the cost of government services. The GDT worked with the finance ministry’s tax policy department and the parliament to implement a raft of legal changes. The department then reorganized each of its 758 tax offices along functional lines, rolled out a new IT system, improved staff training, and created a unit to bolster taxpayer compliance. It later adopted a personal income tax and tried—sometimes unsuccessfully—to close exemptions created earlier to attract foreign investors. Although its collection levels began to plateau after 2010, in the decade or so from 2004 to 2015 the GDT increased the number of registered taxpayers in the country to 15 million from 2 million and tripled the amount of taxes it collected annually, maintaining one of the highest tax-to-GDP ratios in East Asia.

Leon Schreiber drafted this case study on the basis of interviews conducted in Hanoi, Vietnam in May 2018. Case published in August 2018. 

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Chirashree Das Gupta

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Country of Reform
Rohan Mukherjee
Chirashree Das Gupta
Interviewee's Position
Associate Professor, Centre for Economic Policy and Public Finance
Interviewee's Organization
Asian Development Research Institute
Nationality of Interviewee
Date of Interview
Reform Profile

Chirashree Das Gupta of the Asian Development Research Institute addresses a range of governance issues on the reform agenda of the Nitish Kumar government that came to power in India's Bihar state in 2005.  In particular, she talks about the administrative reforms that were necessary after years of curtailed expenditures and reduced functioning of basic governance.  She details the importance of coalition-building and incentive-based ownership of programs by the bureaucracy, while recognizing the issue of brokerage that exists in areas of deprivation with a limited number of positions available.  She highlights the recruitment of 100,000 teachers as both a success and a failure.  She also shares thoughts on integration of different segments of society in a place where the caste system so clearly divides political support.

Case Studies:  Coalition Building in a Divided Society: Bihar State, India, 2005-2009 and Reviving the Administration, Bihar State, India, 2005-2009


At the time of this interview, Chirashree Das Gupta was associate professor at the Centre for Economic Policy and Public Finance of the Asian Development Research Institute, in Patna, the capital of Bihar state, India. She worked on the political economy of state-society relations.

Full Audio File Size
63 MB
Full Audio Title
Chirashree Das Gupta - Full Interview