Budget collection in parallel with support for taxpayers to surmount difficulties

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Domestic revenue collection is still in estimated progress. Photo: T. Linh

Collection progress is slowing down

Entering 2020, when the Covid-19 pandemichas quickly affected almost all economies in the world, including Vietnam’s partners such as South Korea, China, Japan, the EU andthe US, thereby, strongly impacting trade, investment, tourism, businesses and domestic consumers. Besides, the world crude oil price has plummeted; the international financial market has been complicated and unpredictable. This situation has been a disadvantage for the state budget collection task.

According to the Ministry of Finance, total state budget revenue in March was estimated at VND 106.4 trillion. Accumulated in three months of the first quarter of 2020, the state budget revenue reached VND 391 trillion, or 25.9% of the estimate, an increase of 1.8% compared to the same period in 2019. Of which, the domestic revenue was estimated at VND 85.2 trillion. Accumulated revenue in the first quarter of 2020 reached VND 324.7 trillion or 25.7% of the estimate, up 3.6% over the same period in 2019 (it was 26.7%, up 13%).

Due to the impact of the pandemic, many businesses, especially those engaging in air transportation, tourism, hotel, restaurant, wine and beer, have to narrow their production and business activities due to difficulties in the market, interruption of supply of raw materials and strong decline in tourists, which has put increasing pressure on state budget revenues, especially sinceearly March. In that context, the domestic revenue in the first quarter was still able to meet the estimated rate (reaching 25.7%) and had an increase over the same period last year, mainly thanks to some revenues generated in the fourth quarter of 2019 (corporate income tax, oil and gas cost balance) which are finalized and paid in the first quarter of 2020 according to the prescribed regime.

Revenues seeinggood progress are from foreign directinvested (FDI) enterprises reaching 26.3% of the estimate, up 13.5%; from non-state economic sector reaching over 25% of the estimate, up 6.7%; from personal income tax reaching more than 29% of the estimate, up more than 11%; form land and housing reaching more than 33% of the estimate, up nearly 32% over the same period in 2019. It is estimated that 52 of 63 localities in the country reached estimated collection progress (over 23%), of which 45 localities reached over 26% of the estimate; 46 of 63 localities collected higher than the same period last year, 17 localities collected lower than the same period last year.

Meanwhile, revenue from crude oil in March was estimated at VND 4.1 trillion. Accumulated revenue in the first quarter was approximately VND 14.6 trillion, equal to 41.4% of the estimate, up 7.3% compared to the same period in 2019. The world crude oil price recently dropped sharply,sometimes down to US$25-27 per barrel. Revenue from oil was higher than expected due to delays in payment. The average payment price of Vietnamese oil from the beginning of the year until now is still US$65 per barrel, US$5 per barrel higher than the estimated price; the output was estimated at 2.8 million tonnes.

In contrast, revenue from import-export activities continued to decrease. In March, this figure was estimated at VND 26 trillion. Accumulated revenue in the first quarter was VND 77 trillion, equal to nearly 22.8% of the estimate, down 8.8% over the same period in 2019. The major reason givenby the Ministry of Finance was due to a year-on-year decline of 7% in the import-export turnover in the first quarter, reaching US$116.34 billion, of which, import turnover of some items with large budget revenues decreased, such as: CBU cars decreasing more than 43%, steel and iron 16%, gasoline more than 17%, machinery, tools and spare parts 8.6%, directly affecting the budget revenue.

Best facilitation to businesses

To ensure the State budget estimate, from the beginning of the year, the Finance sector has taken synchronous measures to increase budget revenue.

The General Department of Taxation has instructed the tax departments to deploy collection from the first day and the first month, striving to increase the revenue by 7% compared to the estimate assigned by the National Assembly.At the same time, assignedtax departments to conduct inspection of businesses in 2020 to review and includeall businesses registering business in thelist of tax administration, to determine the exact number of businesses temporarily suspended and stoppingoperation, and to inspect and strictly control the value-added tax refund and strengthen the management of sales invoices.

The General Department of Customs also issued a Directive, which requires units to monitor the state budget collection situation; assess impacts on the state budget revenue inthe implementation of free trade agreements; study, propose and implement solutions to increase revenues and combat state revenue losses; actively monitor and evaluate impacts of the Covid-19 pandemic and international integration commitments on state budget revenue to propose and report to the leaders of the General Department and the Ministry of Finance.

According to Mr. Vo Thanh Hung, Director of the State Budget Department under the Ministry of Finance, the task of State budget collection in the first months of the year encountered many difficulties due to the Covid-19 pandemic and the strong decline in the world crude oil price. Impactson the performance of financial and budgetary tasks are being considered in detail.

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In the immediate future, the Ministry of Finance will focus on solutions to help taxpayers surmount difficulties caused by Covid-19, of which the direct solution is extending the tax and land rent of about VND 180 trillion in five months; thereafter, continuing to improve the business investment environment; creating favorable conditions for businesses to develop, promote high and sustainable growth, creating stable budget revenues; at the same time, reviewing and completing incentive policies and encouraging production and business development; and continuing to step up reform of administrative procedures, creating favorable conditions for production and business activities.