Proposal on high taxes to limit the use of nylon bags

	Strengthening discipline of tax inspection
	Stopping a case of exporting timber for tax fraud
	Adjustment on environmental protection tax for plastic bags and petroleum

Green vegetables sold in pots at the market. Photo: T.H

Limit use of nylon bags

According to the HCMC Customs Department, nylon bags are non-essential and have a great impact on the environment. Therefore, to minimize import and production of this item, an increase in tax should be considered. Accordingly, it is necessary to amend and increase the tax framework applicable to nylon bags compared to the current rate prescribed in the Law on Environmental Protection Tax.

Agreeing with the above view, Deputy Director of Ho Chi Minh City Tax Department Nguyen Nam Binh said the Law on Environmental Protection Tax stipulates that the tax framework for nylon bags ranges from VND 30,000 to VND 50,000 per kg. The current specific tax rate for nylon bags is VND 40,000 per kg, equivalent to about 200 percent of the current selling price (1 kg of nylon bags may be from 100 to 200 bags), meaning that the environmental protection tax is only about VND 200-400 per bag. If increasing the environmental protection tax on nylon bags to over VND 50,000 per kg, the tax rate is only equivalent to VND 250-500 per bag.

Ho Chi Minh City Tax Department said that the framework and tax rate on nylon bags in Vietnam is lower than other countries, so it has not had much impact on limiting the production and use of nylon bags. Therefore, the Department recommended considering adjusting the environmental protection tax framework for nylon bags to reduce the use of non-biodegradable nylon bags in consumption and comply with international practices.

In addition, Nguyen Nam Binh said that every year, the Ho Chi Minh City Tax Department collects about VND 9,000 billion of environmental protection tax. To effectively implement the environmental protection tax collection, the leaders of the Ho Chi Minh City Tax Department proposed to levy tax on disposable plastic products. Accordingly, including pre-packaged products nylon films, nylon sheets, nylon strips, tubular nylon rolls made from polyethylene films into the goods subject to taxes as nylon bags and packages. Because, according to Ho Chi Minh City Department of Taxation, the nature of these goods causes negative impacts on the environment.

Moreover, the Ho Chi Minh City Customs Department proposed that the Law on Environmental Protection Tax issued since 2010, so far it has been implemented for nine years. Therefore, it is necessary to summarise and evaluate the implementation process and specify the limitations to have amendments and supplements in accordance with current practice. For goods which are not encouraged to be imported, it is necessary to apply high environmental protection tax or conditional import regulations for inspection and licensing by specialized management agencies.

Unify non-taxable goods

According to Ho Chi Minh City Customs Department, the environmental protection tax revenue since 2016 has increased year on year (particularly in 2016, it decreased by 8 percent compared to 2015). However, this revenue only accounts for a small proportion (less than 0.2 percent) of the total State budget revenue of Ho Chi Minh City Customs Department.

By 2019, applying the Resolution No. 579/2018 / QH14 dated September 26, 2018, the environmental protection tax on taxable goods has increased, such as gasoline from VND 1,000 per litre to 4,000 VND per litre; nylon bags from VND 40,000 per kg to VND 50,000 per kg.

Regarding non-taxable goods, currently, the environmental protection tax policy for goods for export production and processing has not been consistent. According to Point 2.4, Article 2 of the Law on Environmental Protection Tax and Article 2 of Circular No. 159/2012 / TT-BTC of September 28, 2012, amending and supplementing Circular No. 152/2011 / TT-BTC of November 11, 2011 guiding the implementation of the Government's Decree No. 67/2011 / ND-CP of August 8, 2011, detailing and guiding the implementation of a number of articles of the Law on Environmental Protection Tax as below:

The goods directly exported abroad (including exported goods made of imported materials) by the producer or exported by an authorized trader, the customs shall not collect environment protection tax on the exported goods and imported materials.

If the goods subject to environment protection tax are purchased by an organization, household, or individual for export, the producer must declare and pay environment protection tax when selling goods.

However, the current Law on Environmental Protection Tax has not provided for non-taxation on goods exported abroad by export production regime. In essence, the export production and processing is importing raw materials and supplies from abroad, then manufacturing products and exporting the manufactured products abroad. Processed goods are only different from manufactured goods that raw materials, machinery and equipment are supplied by the processor as agreed in the processing contract.

Therefore, in order to ensure fairness and consistency, the Ho Chi Minh City Customs Department proposed to amend and supplement the environmental protection tax policy for export manufactured goods to be the same as export processed goods.

Vietnam Petroleum Association: Raising petroleum environment taxes is reasonable

Furthermore, the current items subject to environmental protection tax have not been specified according to each HS code, so the Customs agency has difficulty in identification, easily leading to disagreements between Customs agencies and enterprises. The Ministry of Finance is proposed to advise the Government and the National Assembly Standing Committee to issue the Environmental Protection Tariff, which specifies names and HS codes of taxable goods according to Vietnam's List of Imports and Exports for unified implementation.