Customs in central provinces: revenue shortfall!

Customs and Border Forces coordinating to inspect cargo vehicles at Cha Lo border gate (Quang Binh). Photo: Quang Tan.

To the present time, according to statistics of the Quang Tri Customs Department, their assigned revenue is 900 billion vnd, but the unit has only generated 202 billion vnd, 22.4% of the plan.

As noted by the reporters of Customs news, in the first days of August at the Lao Bao border gate (Quang Tri) – this unit usually accounted for large revenues for the Quang Tri Customs Department - the amount of goods and vehicles through the border gate has dropped sharply. Two years ago, many vehicles including timber trucks, queued in long lines to cross the border from morning to late afternoon waiting to be processed. Now, these trucks are absent, only a few vehicles carrying tourists sporadically cross at the border gate.

Talking about this issue, Mr Luu Viet Hung – Head of Lao Bao Border Gate Customs Branch said: “The export turnover of the unit has reduced significantly in recent time. Turnover of taxable import items have reduced, such as wood, electronics, electrical appliances, gypsum, minerals, petroleum... Some items have not been imported, the revenue structure has changed markedly”.

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Further explaining about the reduction of Customs tax revenues, Mr. Luu Viet Hung said: “Imported wood products (accounting for 60% of the unit's revenues in 2015) have been significantly limited by Laos' tight natural resources control policies. Specifically, in May, 2016, the Laos’ Government issued a management and inspection Directive on timber exploitation, transportation and trade. The functional forces at the Laos’ border strictly control timber shipment abroad, have strengthened forest gate control, and limited logging activities, thus timber goods have not been imported into Vietnam for some time, which affects the revenue of the unit.

A shortfall of tax collected from the timber importing businesses has occurred not only in the Lao Bao border gate but also in many other border gates with Laos, such as La Lay (Quang Tri), Cha Lo (Quang Binh), and Cau Treo (Ha Tinh).

Lao Bao international border gate with no passing vehicles (Photo: Quang Tan)

part from timber import tax revenues reducing sharply, as reflected by Mr. Tran Xuan Thanh, Head of Cua Viet Port Branch (Quang Tri Customs Department), the major revenues of the unit were petroleum tax, but petroleum companies are currently operating perfunctorily because they can not handle their output. According to Mr. Thanh, to the present time, the branch has collected 80 billion vnd in taxes of more than 300 billion vnd assigned for revenue, only about 25% of the target.

lso in Ha Tinh, after recent environmental incidents, export-import activities of Iron and Steel Co., Ltd. Hung Nghiep Formosa were minimal, the import of input materials serving the plant operation was small, while this company brought more than 90% of the revenues of the Ha Tinh Customs Department in 2015. According to statistics of the Vung Ang port Customs Branch, from the beginning of the year to now, the unit has only collected 1.200 billion vnd of 5.000 billion dong assigned, reaching 24% of the set target.

From within the Formosa company reporters observed that the modern freight conveyor system which is almost 100 kilometers long is not being utilised; the 5km breakwater embankment to take specialized freighters up to 50 thousand tons is also underutilised, and no boats moored. Explaining this, Mr. Nguyen Dinh Binh, Vice-Head of the Vung Ang port Customs branch said: According to the Formosa work plan, they were due to officially operate the blast furnace (according to Formosa, this is a heart of the factory) in June 25, but after environmental incidents, Formosa announced the postponement of the entry into operation of this blast furnace.

"If in operation, Formosa would import coal and iron ore, both commodities are VAT items; after production, export coke would attract 13% export tax. However, after the environmental incident, the blast furnace is not yet in operation, so, ore has not been imported. The company has only imported shipments from previously signed contracts. The coking plant is operating at its lowest capacity to maintain operation, the tax revenue resource of this product is less, so that Customs revenues are affected” Mr. Nguyen Dinh Binh informed.

According to statistics from the Quang Binh Customs Department, until the end of August 17th, Customs revenues were more than 64.2 billion vnd, reaching 32.15% of the target assigned by the Ministry of Finance, falling more than 50% compared to the same period last year.

According to the Quang Binh Customs Department, one of the causes for revenue reduction is export-import categories having less tax, import and export turnover of these commodities have decreased. Previously, export coal was one of the items bringing main revenues, an annual average of about 20 billion vnd. However, since 2016, the government has stopped coal export, so in the first 8 months of 2016, and for all of 2016, revenues of these items will be zero.

Besides, export Australian beef dropped completely compared to 2015, due to implementation of the Agreement on ASEAN goods trade- Australia - New Zealand in the period 2015 – 2018. Also, in the first 8 months of 2016, Quang Binh did not attract any high value investment projects, so State revenues for machinery and equipment in order to form fixed assets decreased 93% compared to the same period in 2015.

Despite the fact at the Cha Lo border gate, the flow of people and vehicles being processed for Import-Export and immigration procedures is brisk, goods are mainly fruits and live cattle (these items attract no tax). So the unit's revenues are affected.

Mr. Le Dinh Sang, Vice-Head of the Cha Lo Customs Branch shared, that turnover structure is variable this year, taxes for wood, plaster, and manioc starch have reduced remarkably. As at July 31st, 2016, the State budget revenues in the branch reached 34.2% compared to the target assigned by the Ministry of Finance.