Revenue collection reflects the development of Vietnam’s economy truly

Assoc. Prof. Dr. Le Xuan Truong, Chief of Tax and Customs Department, Academy of Finance

In the first half of 2021, the State revenue collection reached VND 781 trillion, hitting 58.2% of current appropriation, increasing by 16.3% over the same period in 2020. How has economic growth affected the revenue collection in the first half of the year?

The above results reflected the picture of the development of Vietnam's economy in the first six months of the year and the financial sector's efforts in revenue management. The first factor was economic growth.

According to the Government's report, gross domestic product (GDP) in the first six months of 2021 increased by 5.64%, much higher than in the same period in 2020 (1.82%). The inflation rate was low and the average CPI in six months increased by 1.47% over the same period in 2020 which was the lowest increase since 2016.

The major balances of the economy were secured. The industry and construction sector increased by 8.36% and the agriculture, forestry and fishery sector jumped by 3.69% - the highest result in the past five years. Total import-export turnover was estimated at more than $316 billion, of which exports was estimated at $157.63 billion, increasing by 28.4%.

Thus, with the right policy of the Party and the State as well as solutions of the Government, in the first six months of the year, we successfully performed the dual targets of pushing back the pandemic and spurring the economy. This was the objective basis to generate State revenue collection.

How does this result show the efforts in revenue management of the finance sector?

As I said above, along with economic growth, the result of revenue collection showed great efforts of the whole financial system in performing revenue collection.

On the one hand, the finance sector has well implemented the policies of tax exemption, reduction and extension of the National Assembly and the Government to support firms to overcome difficulties and develop business and production.

On the other hand, tax and customs authorities at all levels have stepped up reforms of administrative procedures and enhanced the application of e-tax and e-customs services to facilitate taxpayers to fulfill tax obligations; synchronously implement many solutions to combat loss of State revenue such as modernising and improving the efficiency of tax inspection and examination towards increasing inspection at tax offices; improve post-clearance audit, combat smuggling and trade fraud; accelerate tax debt collection; coercive tax debt.

The Covid-19 pandemic is forecast to be very complicated and will affect the revenue collection in the second half of the year as well as the whole year of 2021. To ensure revenue collection in the second half of 2021, what recommendations do you have for the Ministry of Finance?

We need to continue to seriously, proactively and creatively implement solutions for socio-economic development directed by the Government to achieve the dual target of COVID-19 prevention and economic development.

It is necessary to continue performing digital transformation and administrative reform in the management of State revenue collection, in which to further improve the convenience and efficiency in processing administrative procedures in the tax and customs field to contribute to facilitate to the development of business and production.

Good implementation of digital transformation and administrative procedures reform also helped cut compliance costs for taxpayers and facilitate taxpayers to fulfill tax obligations.

Tax and customs authorities also needed to closely follow the reality to promptly remove or propose to authorities to remove difficulties in tax mechanisms, policies, and State management in the exports and imports to facilitate the development of production and business. This was a premise to ensure the source of revenue for the State budget.

The Ministry of Finance needed to continue to direct tax and customs authorities to drastically implement solutions to combat loss of state revenue by the power of the whole system, in which, it is necessary to step up and renovate tax inspection and examination methods; post-clearance audit; customs supervision; anti-smuggling and against trade fraud.

In addition, it is necessary to direct tax authorities to focus on exploiting potential areas where new legislation on tax administration is required (Law on Tax Administration No. 38/2019/QH14, decrees stipulating in detail of the Law on Tax Administration, Circular 40/2021/TT-BTC of the Ministry of Finance) has created the basis for revenue management like e-commerce, cross-border digital services and the sharing economy.