Speaking at a meeting in Hanoi last week, Tuan told cities and provinces to draw up plans with higher domestic revenue than 8% as in previous years so that tax and fee revenues from domestic sources could account for over 80% of the total, up from 70% in the past five years.

To realize the target, Tuan told cities and provinces not to set the domestic revenue increase target of only 8% in their reports to be submitted to the ministry in 2016.

Tuan called on tax authorities to make sure that revenues will account for at least 21-22% of gross domestic product (GDP) this year, with taxes and fees making up 20-21% of the total. On top of that, budget deficit must be kept at below 4% of GDP and public debt at below 65% of GDP.

He urged provinces and cities to try to meet the Prime Minister’s requirement that their budget collection rise is equivalent to the combined economic and consumer price index (CPI) growth.

For example, the People’s Council of Dong Nai Province has issued a resolution targeting economic growth of 9% and CPI rise of below 5%, so the province’s budget collections should inch up 14%, he said.

The General Department of Taxation reported that it collected nearly VND806.38 trillion (US$35.95 billion) last year, 10.2% higher than targeted and up 17.7% compared to 2014.

Of the total, collections from crude oil were VND67.51 trillion, 72.6% of the target and 67.6% of 2014. Meanwhile, domestic collections neared VND738.87 trillion, higher than the target and the year before.

The ministry reported at a conference in Hanoi in 2015 that this year’s budget collection target would be VND1,014 trillion, including VND785 trillion from domestic sources, and VND172 trillion from imports and exports.  

The ministry estimated this year’s budget spending at VND1,273 trillion, VND126 trillion higher than in 2015. Of the total, development investments near VND255 trillion, routine expenditures VND824 trillion, and debt payments and aid over VND155 trillion.

According to the ministry, this year’s budget deficit could be VND254 trillion, or 4.95% of GDP, up by VND28 trillion compared to last year.

Last year saw budget collections exceeding over VND957 trillion (US$42.59 billion), 5% higher than the target and 3.1% higher than the target reported to the National Assembly (NA) earlier last year. Of which, revenues from domestic collections were nearly 11% higher than targeted and import-export activities over 98% of the target.

Taxman collects more debt than targeted last year

Tax agencies collected tax arrears of over VND39.1 trillion last year, up 27% against the previous year and 3% higher than targeted.

As of December 31 last year, tax debt neared VND70 trillion, down 11% from December 31, 2014, according to the General Department of Taxation.

Twenty-two localities reported lower tax arrears last year than in 2014, including Soc Trang with a decline of 83%, Lao Cai 50%, Hoa Binh 44%, Can Tho 39% and Kien Giang 33%.

High tax debt increases of over 20% to 30% were recorded in 10 localities while seven localities reported lower rises of 20-30%.

Deputy Minister of Finance Do Hoang Anh Tuan told a review meeting on tax collections in Hanoi last week that the existing regulations cannot meet the needs for writing off tax debts of enterprises. Therefore, the National Assembly is drafting a resolution on this and fines for late tax payers.

Under the current regulations, in order to continue borrowing from banks, enterprises must settle all tax arrears.

According to the General Statistics Office, 16,471 enterprises have had to suspend operation in the year’s first two months, up 17% against the same period a year earlier.

According to the deputy minister, failures of enterprises in the initial period are not risks as up to 62% of firms worldwide fail or go bankrupt in the first one or two years.

Source: SaigonTimes.