Difficulty in collect revenue from petroleum

Monitoring of exports at Gas & Oil Port, Ba Ria-Vung Tau. Photo: Nguyen Hue.

According to Ba Ria-Vung Tau Customs Department, as of 31-8 2016, the revenue of this unit was 9,734 billion VND, reaching 51.8% of the 2016 revenue target (18,800 billion). Ba Ria-Vung Tau Customs Department said that due to the revenues from export of crude oil accounting for a very large proportion of the unit’s total revenue, the plunge of crude oil price had a huge affect on the revenues of 2016. In the first 8 months, the average oil price was only about $US43.15/barrel, 24.4% lower than the same period in 2015 ($US57.089/barrel). Along with prices decline, exports of crude oil on the Ba Ria-Vung Tau province only reached 4.7 million tons, 18% lower. Price and quantity reduction led to a decrease in crude oil export value in the first 8 months of this year, reaching 1.6 billion, dropping 33% against the same period in 2015 and the tax to be collected from this commodity will just reach about 2,096 billion, 35% lower than the same period last year.

Along with the drop in crude oil export revenues, the revenue derived from petroleum and gas fuel imports in the first 8 months in Ba Ria-Vung Tau Customs Department just also reached about 669 billion, 30.7% decrease in comparison with the same period of 2015 (about 296 billion). The reason is that although the volume of imports rose by 15% (reach 411 thousand tons), the value of imports decreased by 11% (approximately 173 million) compared to the same period in 2015. Besides, the revenue from other major sources also declined over the same period, including the revenue from imported cars falling 4.8% at 2,162 billion (about 111 billion); chemical products group decreased by 13.5% (reaching 281 billion), in comparison with the same period in 2015.

Accounting for 37.85% of revenue in the first 8 months in 2015, the collection of gas and oil products of Can Tho Customs Department from the beginning of the year only reached 301.49 billion, 26.68% of the total revenue of the unit (1,129.80 billion). Of these, the revenue from Petrolimex Can Tho Company (under Vietnam Petroleum National Group) only reached nearly 13% of the launched plan of the Group in 2016 (106.11/832 billion). The reason is that the imported shipments from March onwards were made with Korean partners which imported to Van Phong Warehouse under Khanh Hoa Customs Department. Also, the implemention of Vietnam-Korea Free Trade Agreement, shipments will be issued C/O form VK to receive special preferential tax rates according to Circular No. 201/2015 / TT-BTC dated 16-12-2015 of Ministry of Finance (tax rate decreased from 20% to 10%).

However, under the provisions of the Agreement and Circular No. 40/2015/TT-BCT dated 18-11-2015 of the Ministry of Industry and Trade which implement the rules of origin in free trade agreements of Vietnam – Korea, Ministry of Industry & Trade will not grant back to back C/O to each trip, bringing goods out of the Van Phong bonded warehouse will not be granted back to back C/O to get preferential import tax rates. Therefore, Petrolimex Can Tho announced that Vietnam National Petroleum Group has decided to transfer the import procedures to Van Phong Customs Branch. In particular, according to information from leaders of Vietnam National Petroleum Group, from now until the end of 2016 (and even 2017), the Group will not allocate petroleum import quotas through Can Tho province for Petrolimex Can Tho. This will have a huge impact to revenues from petroleum import products at the Customs Department of Can Tho.

Beside revenues from oil, the revenues of the Customs Department of Can Tho depend heavily on revenues from imported goods to create fixed assets of investment projects. By the end of August 2016, revenue from import machinery and equipment which creates fixed assets for investment projects in the province was 466.60 billion, a decrease of 47.46% over the same period in 2015 (888,16 billion). The reason is that a number of new investment projects deployed recently such as Lee & Man Paper Factory, Ltd. Drinks Number One-HG, Song Hau Power Project 1, Duyen Hai Thermal Power Plant 3 expansion, Long Phu thermal power station were delayed or adjusted to reduce the portfolio value of scheduled tax exemption.

Similar to Ba Ria - Vung Tau Customs Department, the decline in revenue from the main export and import products was causing great difficulty for the revenue of the Customs Department of Can Tho. By the end of August 2016, revenues only reached 1129.8 billion, nearly 39% of the target (2,900 billion), a decrease of over 45% in comparison with the same period in 2015.