The State estimated revenue for 2017 has been passed by the National Assembly and assigned to the General Department of Vietnam Customs at VND285 trillion (US$12.5 billion), up 5.6% compared to 2016 (at VND270 trillion). The assigned target was set with tariff barriers under FTAs likely to decline, resulting in a decrease in tax collection from imports and exports, thus having a significant impact on State budget collection.
To date, ten FTAs in and beyond the region have come into force, with the level of liberalisation on average about 90% (the cutting tax rate to 0%) at different times, depending on each FTA. State budget revenues in 2017 are expected to face difficulties, and to fulfil the assigned target, an accurate forecast is needed to identify unforeseen difficulties and challenges, especially devising active response measures.
Creating maximum favourable conditions for enterprises engaged in exports and imports is the first and foremost solution. In particular, the customs sector must promptly solve problems arising in tax policy, tax administration, accounting regulations, tax reimbursement and tax exemption, while removing difficulties to create favourable conditions in which for business to pay taxes.
Reviewing and monitoring tax liabilities at enterprises and classifying debt groups capable of repaying and not repaying are also effective solutions to prevent losses. Each group of debtors should be linked with a detailed assessment of the enterprise’s debt situation, the cause for the unrecovered payment and corresponding debt settlement measures.
In addition, it is important to closely examine cases of tax reduction and exemption, tax refunds, and free tax collection, while bettering price consultation and evaluation and determining the tax code to reduce losses, fraud and tax evasion.
Other measures should be strengthening control over import prices specified in the prices database and commodity tax rates and over product origin and inter-sectoral coordination mechanisms to prevent and detect commercial fraud over the origin of goods, in addition to determining key items with abnormal turnover and high tax rates.
In respect of international cooperation, it is necessary to focus on exchange and support in verifying information with the customs authorities of other countries, especially nations that are members of FTAs, while promptly discovering the taking advantages of FTA tariff preferences for fraud, especially fraud in the origin of goods to evade taxation, causing losses to the State budget.
Much commercial fraud with the help of a number of corrupt customs officers, causing losses to the State budget, has been discovered in recent years. Therefore, inspection of post customs clearance is very important, with a focus on inspection at the offices of the declarers, on key enterprises and sectors with high-risk goods and items marking an extraordinary turnover and high tax rates, as well as with signs of fraud and tax evasion on a national scale.
Last but not least, it is important to strengthen inter-sectoral coordination mechanisms to strictly handle cases abetting commercial fraud over the origin of products and dutiable values in association with focusing on internal inspection and control, ensuring effective control against smuggling and trade fraud and maintaining tight risk management and timely detection of loopholes, shortcomings and inadequacies in management, policies and laws for timely amendment and supplementation.
Despite reduced revenues from exports and imports, strengthening the capacity for implementing and complying with commitments in FTAs, especially those related to trade facilitation, will promote export and import activities and investment and production by domestic businesses.
In the long run, revenues from domestic sources to offset the reduction in import duties are very important.
