VietNamNet Bridge - Within the last several months, plans on raising tax rates have been designed. However, businesses have been reassured that heavier taxation is aimed at big corporations.

Within the last several months, plans on raising tax rates have been designed.

Proposals on raising taxes on many products have been made. The Ministry of Finance (MOF) plans to tax more heavily on car imports under the mode of complete built units (CBU). 

The import tax on some input materials for dairy production will also be raised. Besides, higher tax rates will be imposed on iron exports, while luxury and import taxes will be applied to many beverage products, both domestically made and imports.

The tax increase plans have worried domestic businesses which still have not fully recovered from the economic downturn. 

In most cases, the tax increases commence at the end of the year, while some kinds of taxes would take effect early next year. 

The tax increase plans have worried domestic businesses which still have not fully recovered from the economic downturn.

Many businesses have voiced their complaints about the tax increases, while others have proposed to delay the tax increase plans.

However, HSC Securities, in its latest report, has said that the impacts of the tax increases will be not too big, while the heaviest impact would be seen in some business fields, including dairy production, beverage, mining and automobile assembling.

HSC Securities believes that the current scanty state budget prompted MOF to seek more tax collection sources to increase the budget revenue.

MOF Deputy Minister Do Hoang Anh Tuan said the revenue from crude oil in 2015 is estimated at VND66 trillion, accounting for 6 percent of total state budget revenue, which is even lower than tax debts, estimated at VND76 trillion.

There are three goals MOF aims at when raising tax. 

First, it tries to increase budget revenue. Second, it tries to tax more heavily non-essential goods which see demand increasing rapidly. Third, it wants to impose heavier taxes on import products which see import turnover increasing sharply in recent months, or import products (steel, for example) that may have signs of anti-dumping.

Meanwhile, some economists commented that the MOF move could be seen as a response to the anticipated situation that the budget revenue from tax collection will be decreasing as a result of free trade agreement (FTAs) implementation. 

MOF has to look for other sources of revenue to offset the foreseeable decreases in import tax.

By raising tax on some non-essential goods, MOF would ‘kill two birds with one stone’: while it can bring more money to the state budget, it will help reduce the consumption of non-essential, luxury goods, which is believed to be the main reason behind the trade deficit.


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