State budget revenue faces difficulties

	Four-month State budget revenue drops as Gov’t offers tax relief
	Tax sector ensures implementation of support policies to the right businesses
	Mobilising revenues from equitisation and divestment to State budget

The car imports dropped by 44% in the first five months of the year, causing the sharp decrease in the import and export revenu. Photo: H.P

Domestic revenue faces difficulties

According to the Ministry of Finance, the State budget revenue in the first five months of 2020 reached VND577 trillion, accounting for 38.2% of the estimate, decreasing by 5.9% over the same period in 2019.

The domestic revenue reached VND480.5 trillion, equal to 38% of the estimate, down 5.9% year-on-year. The domestic revenue of 30 of 63 localities of the country is estimated at more than 42% of the estimate and the revenue of 23 of 63 localities increased over the same period in 2019.

Another “difficulty” for the domestic revenue stems from the support policies. After receiving the guidelines from competent agencies, the General Department of Taxation issued a document directing local tax departments to urgently deploy the extension of deadlines fortax and land use fee payments for business households and individuals hit by the Covid-19 pandemic.

According to the report from localities, as of June 1, 2020, the extended tax and land use fee amount was VND36,963 billion, of which, extended VAT amount was VND13,047 billion. The extended corporate income tax amount was VND20,365.4 billion. The extended tax and land use fee amount was VND3,311.9 billion, extended VAT and corporate income tax of business households and individuals in the first quarter of 2020 was VND238 billion. These amounts should be remitted in the State budget according to the estimate.

The Covid-19 pandemic has caused the decrease in import and export turnover of goods. The total turnover in the first five months of the year was estimated at US$196.8 billion, down 2.8% year-on-year, of which, the import turnover of some items with the large revenue such as petroleum products dropped by 48.1%, CBU cars down 44%, iron and steel down 15.9%, machinery and machinery, equipment, tools down 3%.

This decreases the import and export revenue. The total revenue in the first five months reached VND123,485 billion, equaling 36.5% of the estimate, equaling 34.8% of the desired target and decreasing by VND25,621 billion, equal to 17.18% compared to the same period in 2019 of VND149,106 billion.

The revenues of some local customs departments dropped, such as Ho Chi Minh City Customs Department by19.3%; Hai PhongCustoms Departmentby25.74%; Dong Nai Customs Department by24.76%; Ba Ria Vung Tau Customs Department by17.98%; Bac Ninh Customs Department by15.1%; Ha Nam Ninh Customs Department by17.2%; Hanoi Customs Department by5.8%; and Binh Duong Customs Department by6.8% over the same period in 2019.

Hundreds of thousands of billions VND in support

On the other hand, when the economy faces difficulties, fiscal policies have solved urgent problems and long-term issues, creating favorable conditions for the business and investment environment,and production development. Therefore, when the pandemic happened, the Ministry of Finance advised the Government and competent authorities on policies to remove difficulties for people and businesses. This is necessary but it also affects the state budget.

Specifically, the Ministry of Finance has submitted to the Government for promulgation Decree No. 41/2020/ ND-CP on extension of deadlines for tax and land use fee payments to those hit bythe Covid-19 pandemic. Accordingly, afive-month extension of Valued Added Tax and Corporate Income Tax will be applied to enterprises and production and business organizations; afive-month extension for land use fees will be applied to enterprises, organizations and individuals.

According to this Decree, about 740,000 enterprises, accounting for 98% of operating businesses, will benefit from the policy. According to the assessment, under this policy, the amount subject toextension is VND180 trillion and until the end of 2020, this amount can be collected.

The Ministry of Finance has submitted to the Government a draft resolution to reduce 30% of the CorporateIncome Tax of 2020 for enterprises with total revenue in 2020 not in excess of VND50 billion and the number of employees participating in the social insurancenot exceeding100. If this policy is approved, the State revenue is expected to decrease by VND15.84 trillion, and if further tax reduction for medium-sized enterprises is approved, the state budget revenue may fall byVND22.44 trillion.

A proposal to increasethefamily circumstance deduction level of Personal Income Tax was approved by the National Assembly Standing Committee with a new deduction level for taxpayers of VND11 million and for dependents of VND4.4 million. Thus, it is estimated that the retained total income of employees to increase spending thanks to this adjustment in 2020 of about VND10.3 trillion. Thereby, the state budget revenue also reduces.

The Ministry of Finance has continued to promulgate circulars to cut and exempt many types of fees and charges. Specifically, exemptlicense fees for cooperatives and unions of cooperatives operating in the field of agriculture and enterprises, households and individuals that are newly established in the first year, and branches, business locations, representative offices established by small and medium-sized enterprises during the period when they are exempted from licensing fees; reduce 70% of enterprise registration fee; reduce67% of charges for providing information about enterprises;reduce50-70% of the fee for assessment, amendment and supplementation of postal operation licenses; discount from 10-50% for nine service groups and exemptthe price of six service groups in the securities sector. The total of cut fees and charges for businesses and people is about VND500 billion.

Some other policies such as import duty exemption for medical equipment for pandemic prevention; adjusting import tax rates to remove difficulties for businesses operating in the fields of footwear, textiles, agro-forestry and aquatic product processing, mechanics, agriculture, ancillary industry and automobile industry, affecting the decrease the State revenue and increases the possibility of return on investment for businesses about VND 6,000 billion.