Tax reductions under FTAs does not reduce the role of the central budget

VCN - On the afternoon of December 12, the Ministry of Finance held a press conference on tariff reductions under free trade agreements (FTAs).
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Overview of the press conference.

Many tax lines have returned to 0%

Speaking at the press conference, Tran Thi Thu Huyen - Head of the Department of International Cooperation, Ministry of Finance said: The total number of trade agreements that have been signed by Vietnamis 20, of which 12 arein progress, two agreements are in force in 2019, two agreements have been signed but not yet entered into force. The Regional Comprehensive Economic Partnership (RCEP) ended negotiations on 20 chapters and basically ending market opening issues (except for India) and three agreements are under negotiation.

Currently, the Ministry of Finance has submitted to the Government for promulgation 12 decrees on preferential tariffs for partners in these 12 agreements for the period 2018-2022/2023,particularly the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in the period of 2019 - 2022 and Vietnam - Laos from September 1, 2016 to October 3, 2020.However, the Vietnam - Laos Tariff Decree is being implemented in accordance with the list of the ASEAN Harmonized Tariff Nomenclature (AHTN) version 2012 (AHTN 2012).

The ASEAN Trade in Goods Agreement has completed the tariff reduction roadmap by 2018. The agreements are approaching the completion of the tariff elimination roadmap including ASEAN - China (2020), ASEAN - Korea (2021), ASEAN - Australia - New Zealand (2022) achieve a high rate of liberalization at about 90% in 2019.

At the end of the roadmap in 2029, Vietnam's 2019 liberalization rate in the Vietnam-Korea FTA has reached 85.63%, while this rate in the Vietnam-Chile FTA has only reached 31.73%.

The remaining agreements reach an average liberalization rate of about 60% in 2019 such as ASEAN - Japan, ASEAN - India, Vietnam - Japan, Vietnam - Chile, Vietnam – Asian-Europe Economic Union.

According to Huyen, in 2019, Vietnam has signed four more agreements, including: Free Trade Agreement between Vietnam and the European Union (EVFTA), the Agreement on Trade in Goods between ASEAN and Hong Kong - China (AHKFTA), Vietnam - Cuba Trade Agreement and Agreement to promote bilateral trade between the Government of Vietnam and the Government of Cambodia.

As committed, the EVFTA will eliminate 99% of tariff lines at the end of the roadmap. The AHKFTA will immediately cut 29% of tariff lines in 2019 and reach 72% by 2032. The Vietnam-Cuba Agreement will immediately cut 91.3% of tariff lines as soon as it takes effect. And 32 product codes enjoy a special preferential import tax rate of 0% in the commitment between Vietnam and Cambodia.

tin nhap 20191216135100
Mr. Ha Duy Tung responded to the press.

Budget revenue depends not only on tax rates

Responding to questions from reporters on the reduction of tariffs, will the reduction of central government revenues reduce the central role of the central budget, Mr. Ha Duy Tung - Deputy Director of International Cooperation Department, the Ministry of Finance said: When cutting tariffs under free trade agreements, they will mainly cut import duties. According to statistics, the import tax of 11 months of 2019 decreased by about VND 13 trillion.

The proportion of import tax collected in the total revenue of the Customs sector has also decreased gradually. In 2017, this figure was 28%, in 2018 it was 17.4% and in 2019 it was only 16.7%. However, absolute revenue still increases and this year's Customs revenue is expected to reach VND 340 trillion. The increase in revenue depends not only on tax rates but also on import and export turnover as well as measures against tax revenue losses.

On the other hand, according to Tung, in the general budget balance, the Finance sector has taken measures to restructure the state budget revenue so that the domestic revenue increases annually, to offset the shortage due to the reduction of revenueproportion from import and export.

This has led to not worrying about the shortage of the central budget and ensuring the leading role.

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Answering reporters' questions about Vietnam's signing of free trade agreements with the goal of promoting exports but the fact that export growth is declining while trade deficit from countries that have committed to increase, for example, with the ASEAN-China market, the representative of the Department of International Cooperation explained that the overall impact on import and export has many factors, including the international market context, the impact of trade agreements is only partial.

By Hong Van/ HuuTuc

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