Affected by FTAs, Customs revenue sharply declines

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Facilitation to Customs clearance is one of the solutions to raise the Customs revenue. In the photo: Operations at Mong Cai International Border Gate Customs Branch under Quang Ninh Customs Department. Photo: T.Trang.

Turnover increased sharply, revenue increased slightly

Preliminary analysis of import and export turnover shows that total import and export turnover in the first 2 months of 2018 reached US$ 68.54 billion, up by 23.3% over the same period in 2017, of which export value was US$ 34.51 billion USD, up by 26.1%; Import value was US$ 34.03 billion, up by 20.6%. Some export-import items with significant increase and decrease including Crude oil exports decreased 22.5% in value compared to the same period in 2017; Petroleum imports increased 45% in value; CBU automobile imports decreased 96.4% in volume over the same period in 2017.

From the above results, Customs revenue in the first two months of 2018 reached VND 43,123 billion, equal to 15.24% of the estimate, 14.7% of the desired target, up 3.1% over the same period in 2017. Thus, during the past two months, the Customs collected VND 21,561 billion each month on average, meanwhile the Customs desires to collect VND 293,000 for the whole year, so that it must collect VND 24, 417 billion each month.

Analysis of major factors affecting the state budget revenue, a representative from Import and Export Duty Department said that total taxable import and export turnover in the first two months reached US$ 15.02 billion, up by 12.5% over the same period in 2017. In which, the export value was over US$ 1.004 billion, up by 11.7%; the import value was US$ 14.02 billion, up by 12.6%. This shows that the effect of further implementation of FTA commitments on the revenue is significant, which is one of the reasons leading to a 12.5% increase of taxable turnover over the same period last year, but only 3.1% increase in the revenue.

It can be seen that the item which has a greatest impact on the Customs revenue in the first two months is the CBU automobiles. Due to Decree 116/2017 / ND-CP on requirements for manufacturing, assembly and imports of automobiles, automobiles warranty and maintenance services, effective from 1st January 2018, the turnover from taxable automobiles in the first two months of 2018 achieved only 518 units (under 9 seats was 20 units), reaching US$ 32.4 million, the tax receivable amount was about VND 200 billion, down by VND 5,800 billion from the estimate, equivalent to a decrease of 96.7% in volume over the same period in 2017.

In addition, analysis of revenue from some key export items shows that Clinke and cement in the first two months of the year earned US$ 129.8 million, an increase of 76.6% in value, equal to VND 67 billion. Coal rose 58.8% in value, equal to VND 38 billion. However, the main export item was crude oil in the first two months of this year, only reached only 632 tons worth US$ 351 million, down 39.8% in volume, down 22.5% in value, it made the State budget revenue fall 94 billion VND under the estimate.

Revenue from some key import items also fluctuated. Particularly, petroleum products, because Nghi Son Oil Refinery was behind the progress and the world crude oil’s price increased, the import value of petroleum dramatically rose. In the first two months of 2018, the petroleum imports reached 1.77 million tons (up 38.9%), worth US$ 1,113 million (up 61.2%), the revenue reached VND 6,500 billion (15% of total revenue), up by VND 2,953 billion. Of which petrol products reached 584 thousand tons, collecting VND 3.865 billion. However, imported petrol mainly from Korea often submit certificate of origin (C / O) late, so it is expected to refund about VND 1.500 billion of tax

Moreover, the import of automobile parts thereof earned US$ 401 million, down by 14.7%, equal to VND 140 billion. Under Decree 125/2017/ND-CP dated 16th November 2017, some imported automobile parts thereof shall enjoy preferential tax rate 0%, the import tax shall be refunded to some automobile parts thereof that meet requirements stipulated in this Decree. The import tax estimated to be refunded in the first two months of 2018 is VND 1,100 billion.

Focusing on combat against loss of revenue

Realizing these difficulties, the Customs sector has been taking drastic measures to combat against loss of revenue. At a brief meeting of the leaders of General Department of Customs to assess the performance of February and deploy the performance of March, Director General of Customs Nguyen Van Can has requested municipal and provincial Customs units to closely follow Directive 555/CT-TCHQ dated 26th January 2018 on the implementation of 2018 budget collection task, combat against loss of revenue by all measures and strict handling of Customs officers for missing fraud on Customs value declaration and Customs code determination.

It can be seen that 2018 is the year that import tax rate under FTAs has beencut sharply,with over 90% of items under ATIGA beingsubject to import tax rate 0%. Accordingly, the Directive of General Department of Vietnam Customs requested the units to enhance their resources to inspect conditions for items subject to special preferential tax rates under FTAs, in which focusing on inspecting C/O and actively verifying cases of suspicion of origin fraud in order to avoid profiteering, causing a loss of budget revenue.

In addition to Customs administrative reform, modernization, and trade facilitation to shorten Customs clearance time and cost, the Customs sector has also strengthened post clearance audit, inspection, anti-smuggling and anti-trade fraud, in which focusing on inspection of value, code, and C/O for items with high tax rate, large import value and high import frequency. Renovating the inspections and examinations in direction of reducing number of inspections and examinations underthe plan and focusing on inspection and examination for cases with signs of violations.

It is known that withthe implementation of state budget collection, each Customs Department has developed its own action plan depending on its economic characteristics. The Customs units also introduced measures to effectively exploit and manage revenues, strive to fulfil the assigned task and prevent outstanding debts. Closely following the sector’s key task, local Customs units have identified the importance of good implementation of budget collection task, enhanced Customs administrative reform and management modernization to provide maximum support and facilitation to enterprises.

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Some municipal and provincialareas gained good revenues in the first two months compared to the estimate, which are Hanoi Customs Department (20%), Quang Ninh (29.6%), Dong Nai (15.2%) and Ba Ria- Vung Tau (18.7%)