Photo: Duc Anh
Tax debts on the rise and putting pressure on budget.
Total tax debts in the first five months increased by VND1.3 trillion ($59 million) to VND75 trillion ($3.4 billion) since last December, putting pressure on the State budget.
Bad tax debts, which are unlikely to ever be collected, stood at more than VND15 trillion ($680 million), according to Mr. Nguyen Dai Tri, Deputy Head of the General Department of Taxation (GDT).
“The ‘slow’ state of the economy has made businesses struggle with repaying debts while many people have not complied with tax policy, receiving fines that subsequently increase the total amount of late tax payments,” Mr. Tri said at the agency’s quarterly press briefing on July 2.
Tax debts owed for in excess of 90 days reached VND44.5 trillion ($2 billion), accounting for 46 per cent of the total.
Vietnam faces a tough time as the State budget, which primarily relies on tax collections, has been in deficit for an extended period, with expenditure continually outpacing revenue.
State budget collections in the first six months were VND476 trillion ($21.6 billion), equal to 46 per cent of the annual plan and up 6.1 per cent year-on-year, according to MoF reports. As at the end of May more than VND20 trillion ($909 million) in debts from last year had been collected by provincial tax departments.
Tax revenue came from joint stock companies (53 per cent of the annual plan and up 22 per cent), foreign invested enterprises (49 per cent of the plan and up 12.8 per cent), personal income tax (56.1 per cent of the plan and up 16.8 per cent), and land use fees (75.2 per cent of the plan and up 34.2 per cent).
The declining crude oil price has resulted in low tax revenue from State-owned enterprises (36.6 per cent of the 2016 plan) and taxes on crude oil (37.2 per cent of the plan and down 44.8 per cent), according to MoF.
State budget expenditure was VND562.5 trillion in the first half (44.2 per cent of the annual plan and up 4.9 per cent). The government has used VND2.9 trillion ($131.8 million) from the budget to assist people affected by drought in the central highlands and the recent pollution incident on the coast of central provinces.
Government debt, meanwhile, was reported at VND1,830 trillion ($86 billion) in 2014, doubled the figure in 2010, according to MoF’s latest report in June. In particular, domestic debt was more than VND1,000 trillion ($47 billion) and foreign debt was some VND800 trillion ($39 billion). The cost of servicing government debt in 2014 alone was VND260 trillion ($11.8 billion).
Government debt accounted for 50.3 per cent of the country’s GDP as at December 31, 2015, MoF figures showed. The ratio has exceeded the cap of 50 per cent set by the National Assembly for the last five years.
The state of the economy from now to the end of the year remains difficult to forecast with unforeseeable issues, according to Mr. Tri. “MoF will cooperate with authorities to strengthen tax policy, including fighting tax evasion, smuggling, and trade fraud,” he said.