Revenue in first nine months decreases but fiscal space for whole year still large

Units focus on inspecting to prevent revenue loss. Photo: T.L

Domestic revenue the lowest in recent years

Over the past three quarters, the entire sector deployed measures to achieve the highest target in revenue collection 2020 andstrengthened revenue management in the area, prevention of revenue loss, smuggling, trade fraud and transfer pricing, and reduction of tax debts; focused on reviewing and grasping tax debts of tax branches; classified groups of recoverable tax debts and irrecoverable tax debts.

However, actual revenue still dropped11.5% year-on-year due to the negative impact of the Covid-19 pandemic on many economic sectors.

Specifically, domestic revenue in September showed positive signs with an increase of VND 7 trillion (9.5%) compared to August, bringing revenue in the first nine months to VND 812.4 trillion, 64.3% of the estimate. However, total domestic revenue still fell 8.3% year-on-year and this was the lowest compared to the same period in some recent years.

Revenue from crude oil in the first nine months still fell sharply, hittingVND 27.5 trillion, equal to78.25 of the estimate, declining 36.9% year-on-year.

State budget revenue from import and export activities in September is estimated at VND 14.57 trillion based on total tax revenue of nearly VND 25 trillion, falling 2.5% month-on-month withVAT refund of VND 10.4 trillion.

Thus, after nine months, revenue from imports and exports was 64.7% of the estimate, down20.1% year-on-year.

To prevent revenue loss, in the first nine months of the year, revenue management agencies strengthened the tax inspection, examination and revenue collection, promptly detecting and handling violations. Ofwhich, tax agencies have conducted VND 48.98 trillion tax inspections and examination at enterprises’ headquarters; inspected 436.1 tax declaration dossiers of enterprises,proposed to handle and contributed to the State budget and reduce revenue loss of VND 39.68 trillion.

The tax sector has proposed collecting VND 13.27 trillion. So far, State revenue is nearly VND 6.7 trillion, handled and collected VND 20.29 trillion of bad debts transferred from the previous year.

Customs has conducted 1,191 inspections and examinations, mainly post-clearance audits, thereby, proposing to collect VND 952 billion for the State budget; worked with competent forces in arresting 12,019 customs offences, and collected VND 509.6 billion.

Actively manage

Sharing difficulties in revenue collection in the year, Minister of Finance DinhTien Dung said that in response to the negative impacts of the Covid-19 pandemic and monitoringthe reality,the Ministry of Finance of Vietnam has developed plans to manage budget revenues and expenditures.

“While the budget deficit is expected to sharply decline due to lower economic growth than expectations, strong decrease in crude oil prices and adjustment of tax collection policies to remove difficulties for business production, the spending needs for the prevention and combat against the Covid-19 pandemic, social security, consumption stimulation are so high, causing State budget deficit,” Dung said.

However, to ensure balance for expenditure, the Ministry of Finance has requested ministries, branches and localities review and cut unnecessary and urgent expenditures; reduce recurrent expenditures by 10% and reduce overseas business trips by 70%. The ministry has used the budget reserve and mobilised resources from the society.

According to Dung, it is important for Vietnam that after five years of implementing the socio-economic development plan for 2016-2020, Vietnam's fiscal space has increased, especially, the overspending is closely managed, so public debt has dropped to 54% of current GDP (2019); public debt quality has been improved highly; the government bond market is effective.

At the end of 2019, many targets set for the five-year financial plan have been basically completed. For example, budget revenue reached 25.5% of GDP, budget expenditure was nearly 28% of GDP; overspending was 3.36% of GDP and public debt was 54.7% of GDP.

Thus, fiscal space is increased, and the public debt structure is improved. Although the revenue in 2020 has decreasedcompared to the estimate, the fiscal space is large, so compensation for the increase in expenditure on development investment and pandemic prevention is absolutely possible.

“If compared with the period 2013-2014, the current space is very wide. Therefore, although the overspending must be increased in the near future, Vietnam still commits to continue to implement measures to support enterprises to overcome difficulties,”- Dung said.