VietNamNet Bridge – The Ministry of Finance is facing a hard problem as the danger of central State budget collection shortfall has turned visible whereas local business community is calling for a cut in corporate income tax.
Speaking at the press conference on Wednesday, the ministry announced the State budget collection was nearly VND168 trillion in the first quarter of this year, or 20.6% of this year’s target and down 2.6% compared to the same period of 2012.
Deputy Finance Minister Vu Thi Mai said that this figure was much lower than previous years. Earlier, the central budget collection in the first quarter was around 25-27% of the entire year’s target.
“However, the ministry will take drastic measures to fulfill the State budget collection target this year,” Mai said.
The ministry will apply four measures, comprising removal of difficulties for enterprises, fighting loss in budget collection, cutting expenditures and balancing provincial budgets, to reach this goal.
The State budget spending stood at over VND218 trillion in the first quarter, up 6% year-on-year and much higher than the revenue. But the ministry will strive to keep budget overspending at 4.8% of GDP (gross domestic product) as required by the National Assembly, Mai added.
However, this determination went against the ministry’s plans to help local businesses overcome current difficulties, since efforts to boost tax revenues will push more into troubles. Nearly 16,000 enterprises disappeared in the first quarter of this year after up to 116,000 firms closed down in the recent two years, according to the Ministry of Planning and Investment.
Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), told the Daily that the business community is in the toughest time ever.
Many associations have suggested that the corporate income tax be slashed from 25% to 20% instead of just 23% as proposed by the Finance Ministry.
Mai said that the National Assembly Standing Committee has recently suggested the Government to draw a road map for cutting the tariff to 20%. The Ministry of Finance has been told to find out the optimal solution for this plan.
The ministry is calculating impacts of corporate income tax reductions on the central budget and the local business environment. The tax rate of 23% actually is rather low and competitive compared to other countries in the region, Mai said.
The committee on April 18 will look into the Resolution on Tax composed by the Government to help ease difficulties for enterprises. The resolution will mention value-added tax reduction and other issues related to the corporate income tax applied on a number of special firms.
However, Mai said the ministry will not seek approval to revise this year’s central budget collection target despite low income in the first quarter.