Many textile and garment enterprises see a sharp drop in export orders

Domestic income tends to decline

In April, the State coffers raked in VND139.1 trillion, equal to 8.6% of the full-year target and equal to 82.4% of the monthly average in the first quarter (about VND29.7 trillion less). Specifically, the domestic revenue was estimated at VND113 trillion, equal to 8.5% of the full-year target and 79.6% of the monthly average in the first quarter (nearly VND29 trillion less), mainly because corporate income tax in 2022 was collected in January. At the same time, the first-quarter economic growth was lower than expected in the reported period as some industries struggled with difficulties. Besides, the extended payment deadline for land rent and tax as per the Governmental Decree 12/2023/ND-CP dated April 14, 2023 was attributed to the April decline (as much as VND38 trillion was granted payment deadline extension).

Vietnam collected VND5.5 trillion of tax from crude oil in April. The average oil price was US$86.4 per barrel in the month, US$16.4 higher than the expected price. Oil production was forecast at 700,000 tons in the month.

Exports and imports were levied VND20.6 trillion of duty in the month. VAT refund was VND9.8 trillion.

From January to April, the State Budget was forecast to collect VND645.4 trillion, equal to 39.8% of the full-year target and down 5% year on year (The central budget revenue was estimated to fulfill 42.9% of the target and the local budget revenue was forecast to achieve 36.3%). Domestic revenue was estimated at VND538.8 trillion, equal to 40.4% of the target and down 2% year on year.

According to the Ministry of Finance, although domestic revenue fared well in the first four months of the year as compared to the target, monthly takings tended to contract (January revenue equaled 16.1% of the full-year target; February, 7.1%; March, 8.6%; and April, 8.5%). If corporate income tax, dividend income, retained profit and balance sheet of the State Bank of Vietnam (SBV) were excluded, the four-month domestic revenue was 11.7% lower than the same period in 2022.

In addition, eight out of 12 revenue items met the estimated progress (over 34% of the full-year targeted estimation). The budget revenue collected from three economic sectors (accounting for 53.3% of the domestic revenue) fulfilled 42% of the target and rose 2.4% year on year. However, if corporate income tax was excluded, the budget revenue of the three economic sectors sank 8.5% year on year; personal income tax was forecast to reach 42.4% of the target; revenue from the lottery business was estimated at 49.2% of the target; while dividend income, profits and the balance sheet of the SBV fulfilled 81.5% of the targeted estimation. Other budget revenue was equal to 77.3% of the target.

Four revenue items were lower than their estimates, including environmental protection tax (fulfilling 16.8% of the target, falling 50.3% year on year); fees and charges (completing 32.2% of the target, down 8.6% year on year); revenue from housing and land (accounting for 13.3% of the domestic revenue; fulfilling 20.9% of the target, contracting 53.4% from a year earlier); and mining tax (fulfilling 25% of the target, up 8.7% year on year).

By locality, 25 out of 63 provinces and cities completed over 38% of their full-year targets in the first four months. 16 localities reported budget revenue growth while 47 localities saw decline.

Meanwhile, revenue from crude oil was VND21.9 trillion, equal to 52.2% of the target, down 9.6% year on year. The balance sheet of import and export duties is estimated at nearly VND84.7 trillion, equal to 35.4% of the target, down 19.9% year on year.

Tax sector fiercely fights against tax loss

According to the Ministry of Finance, in April, tax and customs authorities continued to implement policies on exemption, reduction and extension of taxes, fees, charges, and land rents in support of businesses and people. The total amount of exemption, reduction and extension was estimated at VND56.32 trillion by the end of April (exemptions and reductions accounted for VND18.32 trillion and extensions accounted for VND38 trillion). The authorities intensified tax collection inspection, reviewed income sources and loss prevention in a bid to complete the target better than expected to offset the revenue decrease due to policy implementation, and strictly controlled value-added tax refunds to ensure compliance with tax policies and regulations.

The authorities managed and urged timely tax collection from real estate, securities and e-commerce transactions and collection from foreign suppliers without permanent establishments in Vietnam. They continued to deploy the information portal on e-commerce platforms and e-invoices with the tax authority's code generated from cash registers for companies and business households that supply goods and services directly to consumers. The stepped-up digital transformation, implemented a project on the construction of a big database on electronic invoices, data analysis solutions and mining tools; applied artificial intelligence (AI) technology; and developed digital tax services for businesses and taxpayers.

As of April 15, 2022, the tax authority conducted 9,800 inspections and examinations; and checked 102,900 tax declaration records filed by enterprises. It recommended a financial settlement of VND15.12 trillion, of which VND3.9 trillion was collected into the State Budget (VND2.4 trillion already sent to the State Budget) and VND11.22 trillion came from withholdings and revised loss reported by taxpayers. It urged the collection and settlement of overdue tax of VND14.9 trillion as of the end of April.

In this context, according to Deputy General Director Phi Van Tuan of the General Department of Taxation, the continued enforcement of reduction policies in the coming time will affect State budget revenue in 2023. Therefore, the sector needs to work out drastic solutions to increase budget revenue to compensate for the decrease resulting from new reduction policies.