Finance minister discusses 2014 budget

Is it true that the budget has been hit hard by the poor business performance of many firms?

Companies face a host of difficulties and those with no taxable income account for two-thirds of the total.

That said, over the past 10 months government agencies and localities have shown their determination to enforce Resolutions 01 and 02 to tackle hardships and support businesses which has helped rebuild momentum. Accordingly, 19,320 new businesses were registered in the third quarter, up 18 and 11.4 per cent against the third and fourth quarters last year.

Does this suggest budget collections will go up?

Budget collections in October were estimated at $3.4 billion, surging 36 per cent against September and helping the country hit $29.4 billion in collections so far this year. This brought collections to below 76 per cent of the estimate, but up 8.6 per cent on year.

While budget collections are creaking forward, unpaid taxes are mounting. How will the financial sector address this?

To tackle the issue of debt, the Ministry of Finance (MoF) has asked tax departments to classify them into different groups. Unpaid taxes associated with streamlining or restructuring a business may be written off and those of struggling enterprises may receive extended deadlines.

Healthy firms that have delayed paying will be forced by tax bodies to bring their accounts to current, and this should help the state budget to reach its target.

Will the amended CIT (Corporate Income Tax) law affect budget goals?

Starting in the second half of this year, businesses with annual revenues under $952,000 are required to pay only 20 per cent CIT rather than the normal 25 per cent and from the beginning of next year standard CIT will be reduced to 22 per cent. Based on these changes, the estimates for 2014 were revised down from $38.8 billion to $37.2 billion. It was hoped this would motivate firms to use the extra capital to expand their businesses, thereby generating more tax revenues.

In a recent dialogue between tax authorities and businesses, it was rumoured that officials were generally praised by the business community but there were also some major complaints, is this true?

There are always conflicts between businesses and tax authorities, it is inevitable. But to be constructive I want to say that we are doing our best to support companies. An example of this is our efforts to resolve the problem of VAT refunds for rubber, coffee and seafood exporters.