Importing higher tax revenue

The General Department of Customs (GDC) has made a series of proposals benefiting import-export businesses with a view to hiking tax revenue.

In 2012, the customs sector was assigned to collect VND223.9 trillion ($47.4 billion) taxes. Of this, VND80.5 trillion ($3.8 billion) will come from import-export duty and excise tax and VND143.4 trillion ($6.8 billion) from value added tax.

However, in the year ending August, the GDC just collected VND125.8 trillion ($6 billion) taxes, tantamount to 56.2 per cent of the projection and down 11.8 per cent on-year.

To avoid import export tax collections falling short of projections the GDC had sent proposals to the government, ministries of Industry and Trade (MoIT) and Finance (MoF) asking to loosen some regulations on import of luxurious items which are being tightened to abate trade deficit.

Accordingly, the GDC proposed revising MoIT’s Circular 20/2011/TT-BCT of May 12, 2011 stipulating additional import procedures for brand-new cars of nine seats and below. Particularly, the GDC asked to remove a regulation requiring car importers to show evidence they were authorised dealers of genuine car manufacturers or traders.

The GDC argued the move would help allow more car importers and dealers to join the market while boosting supplies of imported cars with a wider variety of brands.

The customs sector also proposed easing regulations towards import of alcohol, cosmetics and mobile phones into Vietnam by abolishing MoIT’s Notice 197/2011/TB-BCT regulating import procedures of alcohol, cosmetics and handsets into Vietnam.

To avoid tax evasion, the GDC suggested revising policies governing temporary import-reexport of goods, including petroleum products.

A GDC senior official said in the past months a number of petroleum traders had imported products in the form of temporary import-reexport. They later sold  petroleum products in the domestic market to gain extra profits instead of reexporting the products as proposed.  

To tackle the situation the GDC had proposed immediately levy taxes on petroleum products to prevent firms from cashing in on tax incentives towards temporary import-reexport goods.

Customs sector statistics show that Vietnam exported 6.27 million tonnes of crude oil in the first eight months of 2012, generating over $5.5 billion in export value, up 9.3 per cent in volume and value against the same period in 2011.

In respect to petroleum import, total import value came to $6.3 billion in the period, sliding 12.3 per cent in volume and 6.9 per cent in value on-year.

Sinking completely-built unit (CBU) car imports was most critical in the year ending August. Accordingly, Vietnam imported a total 18,027 CBU cars valued at $384 million, tantamount to 40 per cent of projection in volume and plunging over 50 per cent in value on-year.

Of them, cars less than nine seats accounted for 9,509 units valued at $99 million, shedding 56.3 per cent in volume and 50.7 per cent in value on-year. With around 80 per cent import duty and 45-55 per cent excise tax these declining CBU car volumes meant a big dent to state budget.