FTAs have a great impact on the Customs sector’s revenues

	Why does Vietnam have to sign many FTAs?
	Vietnam is big winner of free trade deals
	Affected by FTAs, Customs revenue sharply declines

Customs officers of Thai Nguyen Customs Branch, Bac Ninh Customs Department implement physical inspection for imported goods. Photo: T.Tr

Revenues from petroleum product imports reduced by VND 2,000 billion

According to the calculation from the General Department of Vietnam Customs, the imports and exports in the first 4 months of 2018 showed that the State revenue from imports and exports reduced about VND 7,800 billion due to the implementation of the tariff reduction roadmap. In which, the reduced revenue from the petroleum product imports was the largest. In the first 4 months of 2018 the Customs sector implemented tax refunds of VND 550 billion for enterprises that submitted the C/O. It is expected that the Customs sector must refund about VND 1,500 billion. Therefore, the revenue from the petroleum product imports reduced by VND 2,050 billion. In the first 4 months of 2018, the revenues from CBU car imports reduced by VND 1,350 billion; revenues from iron and steel decreased about VND 60 billion; revenues from animal and vegetable fats and oils reduced by VND 80 billion.

So far, 12 FTAs have been signed, including the CPTPP which was officially signed in March 2018.

According to Kyodo, ministries of 16 Asia-Pacific countries who participate in the negotiations on Regional Comprehensive Economic Partnership (RCEP), will meet in Tokyo on 1st June 2018.

This meeting will be the first time a country outside the Association of Southeast Asian Nations (ASEAN) will host a ministerial meeting to negotiate on the RCEP. The RCEP is a free trade agreement that includes 10 ASEAN economies and 6 dialogue partners, they are; Australia, China, India, Japan, South Korea and New Zealand. The RCEP negotiations were launched in November 2012. After being signed, the largest trading block in the world will be established, accounting for 50% of the world's population and 39% of global gross domestic product. Thereby, the RCEP has the potential to play a leading role in global growth.

In addition, the two new-generation FTAs which are CPTTP and FTA with the EU, are expected to impact on the reduction of the State revenues in 2 directions. The first, these FTAs require conditions higher than the other FTAs on import duty elimination up to 100% and FTA with the EU with the expected rate of import duty elimination of over 90%.

These FTAs require the elimination of export duty because they consider this as the indirect subsidy for domestic production and the export duty helps domestic production to buy raw materials at a cheaper prices compared to the world market. Thus, it is expected the these two FTAs will have greater impact than the other FTAs.

But considering carefully, it can be seen that among the countries that Vietnam is negotiating with on TPP, Vietnam has had FTA relationships with 7 countries, including Singapore, Malaysia, Russia, Chile, Japan, Australia and New Zealand. The import duty reduction under TPP with these countries is just a step to supplement import duty rates signed in FTAs. Therefore, the additional impact on the revenue from imports from these countries will not be significant. With the remaining 4 countries, the impact from import and export duties is not significant.

Continue to provide synchronous solutions to prevent tax losses

The implementation of FTA commitments aims to attract and contribute to increase foreign investment and reduce input costs for domestic enterprises, promote business production and import and export turnover. However, this also leads to the reduction in the State revenue from import duty. Thus, from the beginning of the year, the GDVC requested units to actively evaluate the impact of FTAs on the State revenue, drastically direct and urge and strengthen to review and control revenues; study, propose and provide solutions to increase revenue and prevent tax losses. Including, reviewing and grasping the tax debt, classify debt groups and evaluate in detail each enterprise, and the tax debt situation of enterprises, give reasons and provide handling method in accordance with regulations. Drastically handling, enforcing and recovering tax debt, reducing outstanding tax debt, not raising new tax debt and to not incur the occurrence of tax debt during the new period higher than the previous period.

Impact of FTAs in 2018 VCN- According to calculations by the General Department of Customs, with the tariff reduction schedule, the reduction ...

Along with that, continuously implementing administrative reform and creating favorable conditions for importers and exporters. Collaborating with ministries and sectors to deploy the National Single Window, reducing clearance and release times that are equal to the average level of ASEAN-4 countries under Resolution No. 19-2017/NQ-CP. On the other hand, implementing effectively Decree 36a/ND-CP, setting the target to provide e-Tax payment service at level 4. The GDVC signed coordination agreements with 38 banks on e-tax payment and 5 banks on piloting of e-tax payment and Customs clearance 24/7/