Deputy Finance Minister explains state budget shortage
VietNamNet Bridge – The Ministry of Finance on Monday (Oct 26) held a press conference to explain causes on state budget balance that the public currently raise concerns about.
Deputy Minister Do Hoang Anh Tuan said that the ministry would focus on collecting tax debts, fighting against transfer pricing and inspecting businesses over their financial obligations, aiming to deal with difficulties in budget revenue next year.
Anti-transfer pricing measures are an important way to prevent tax collection failure, he said. The ministry has established five units in charge of this work and expected to build a database of 11,500 foreign direct investment enterprises in Vietnam by the end of this year.
Explaining what causes budget shortage, Mr. Anh Tuan said that the ministry had put in an estimate for crude oil price at US$100 a barrel, but in reality crude oil is sold at US$ 54-55 a barrel, resulting in tax bill reduction.
In addition, Vietnam has conducted economic integration commitments in the ASEAN region to cut taxes. For instance, import tariff on mazut and diesel has been lowered to 10 percent this year and will continue sliding to 0 and 5 percent respectively early next year. It is double or triple for products outside ASEAN.
Meanwhile, tax debts reach VND76 trillion (US$3.41 billion) now, he said.
Besides uncollectable amount due to irresistible reasons, VND34 trillion is collectable from enterprises who are affordable for but have yet to make the payment, he said, adding that if 50 percent of this source is claimed, the budget would have VND17 trillion.
Despite of the central government collection failure, according to the Government’s report to the National Assembly, the state budget revenue will exceed predicted number, to reach VND17.4 trillion (US$780.06 billion) this year, the deputy minister said.
Of these, local budget revenue has been on the rise because good economic growth, expected at 6.5 percent for the whole year, and low consumer price index, about 1.5-2 percent, have facilitated enterprises’ trading activities and business income tax payment is predicted higher than last year.
The Government has proposed the National Assembly to permit the use of VND10 trillion (US$448.31 million) from selling state capital at businesses to make up the budget deficit. On the other hand, the Prime Minister has instructed the Finance Ministry to collect taxes fully and rightly to balance budget and gradually reduce the use of that fund.
The second solution is inspecting 506,000 businesses that have made tax declaration and payment themselves.
According to the Tax Management Law and requirements by the National Assembly’s supervisory delegation, tax agencies must inspect 15-20 percent of these firms.
Inspections in September found that an addition of VND8 trillion should have been submitted to the state budget, VND5 trillion of this has been claimed so far and collection of the remaining fund is possible.
Moreover, Vietnam will concentrate on recovering VND86 million that it should be enjoyed in the Vietnam-Russia Oil and Gas Joint Venture.
Answering reporters’ question on the issue of US$3 billion international bonds, Mr. Tuan said that it aims to restructure short-term debts. Therefore, total debts will not change but creditors, interest rate and payment time.
The use of the fund from the bond issue will depend on demand not be at the same moment because the US$3 billion is the ceiling level for the phase of 2015-2016, he added.