HCM City: Positive signals from the sharp increase in tax revenues

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Manufacturing businesses flourished from the beginning of the year, positively impacting budget revenues

A series of tax revenues sharply increased

According to Le Duy Minh Director of HCM City Customs Department, in the first month of 2021, State budget revenues from many major taxes surged year-on-year. Of which, revenue from corporate income tax jumped 10.8% or an increase of VND 1,396 billion year-on-year, resulting from the temporary payment of corporate income tax by businesses per Article 17 of Circular No.151/2014/TT-BTC of the Ministry of Finance.

The revenue from value added tax increased 12.1% or up VND 935 billion year-on-year; of which, the increase in revenue from value added tax in the non-State industrial and commercial sector was highest at up 19.97%, accounting for 95% of the increase in VAT revenue.

According to HCM city Customs Department, this is the highest growth rate in the last three years from VAT, while the revenue in the first month of 2020 decreased by 1.46% year-on-year and the first month of 2019 increased by 12.07 % year-on-year).

Revenue from the special consumption tax soared 33.96% or an increase of VND 583 billion year-on-year and this is the highest revenue among three major revenues.

The growth is mainly from the increase in the revenues of items such as beer, cigarettes, and cars. Specifically, revenue from beer and alcohol accounted for 47.65% of special consumption tax revenue and grew 33.79% year-on-year because Heineken Vietnam Brewery Co., Ltd has output and selling price increased and the amount of deducted special excise tax decreased, leading to a jump of 28% in revenue compared to the same period in 2020.

Revenue from domestically manufactured and assembled cars with less than 24 seats accounted for 17.42% of special consumption tax revenue and increased 42.08% year-on-year due to the increase in volume of cars sold in December 2020, up 36% year-on-year to enjoy the support policy under Decree 70/2020/ND-CP (50% reduction of registration fees for domestically manufactured and assembled cars applied until December 31, 2020).

Personal income tax revenues showed the lower growth rate. The revenue from this tax rose 4.46%, or an increase of VND 226 billion. However, HCM City said this was the lowest growth in the last three years (the revenue in the first month of 2020 increased by 8.07% year-on-year; revenue in the first month of 2019 increased 18.71% year-on-year).

The impact of the Covid-19 pandemic reduced tax revenues over the same period. Of which, some tax revenues recorded lower growth rates over the same period, showing the impact of the Covid-19 pandemic, such as income tax revenue from wages reduced by 9.2% (increased by 17.4% in 2020) and revenue from production and business activities of individuals increased by 4.85% (it jumped by 8.48% in 2019).

Positive signals in the first month of the year

According to Le Duy Minh, Director of HCM City Customs Department, despite the complex development of Covid-19 pandemic, HCM City economy still showed bright spots when most sectors achieved growth.

The index of industrial production increased by 34.5% year-on-year because most firms focused on boosting production in January to prepare goods for the Lunar New Year and export turnover increased by 16.4% year-on-year; total retail sales of consumer goods and services in January increased by 4% year-on-year. One remarkable point is that there are 3,309 HCM-based firms that have re-operated businesses, up 119.58%.

Such optimistic signals have had a positive impact on the city's revenue sources for the State budget. Only in the first month of 2021, the HCM City Tax Department collected VND 36,630 billion, reaching 14.26% of the estimate, a surge of 7.1% year-on-year.

According to the analysis of HCM City Tax Department, revenue from production and business activities increased quite high and the revenue in January was VND 26,393 billion, reaching 16.62% of the estimate, up 13.4% year-on-year, accounting for 73.98% of domestic revenue excluding crude oil.

Revenue from the State economic sector in January reached 10.8% of the estimate, an increase of 2.79% year-on-year. Of which, revenue from foreign-invested firms in January was VND 10,671 billion, reaching 16.65% of the estimate, up 9.77%.

HCM City Tax Department is implementing many effective solutions. Accordingly, keeping a close watch on the progress of revenue collection, providing specific assessments and analysis of each area, tax and reason for increase and decrease in revenue and closely supervising revenues key targeted businesses; building an effective revenue management plan in line with revenue in each period, striving to complete the ordinance estimate in 2021 of VND 256,893 billion.