Worry about loss of domestic revenue in the future

Some major revenue sources have decreased rapidly. Photo: Thùy Linh.

The revenue is clearly affected

According to the latest report of the General Department of Taxation, the estimated revenue collection in March managed by the tax sector is VND89,000 billion. This revenue reached only 7.1% of the ordinance estimate, equal to 97.8% compared to the same period in 2019.

According to the assessment of General Department of Taxation, in general, the result in first quarter of 2020 was due to the economic growth in the fourth quarter of 2019.

However, revenue movements over the following months have shown signs of decreasing due to the Covid-19 pandemic, especially since March, revenue has had a clear influence and some major revenue sources have decreased rapidly.

In some big cities, the revenue collection in the first quarter also faced many difficulties. Hai Phong Tax Department is one of the units that failed to meet the plan in revenue progress.

According to the latest report by Hai Phong Tax Department, by the end of March, the Department's revenue collecton was only VND6,900 billion, equivalent to 22.5% of the current appropriation (while the plan must achieve 24-25%). As in March, the domestic revenue of the Tax Department was only VND2,150 billion, a revenue loss up to VND50 billion compared to the plan.

Explaining the cause of this situation, according to Hai Phong Tax Department, by the end of the first quarter, revenue collected from business and production sectors, especially some sectors such as petroleum, beer and alcohol, all decreased. Besides that, the revenue collected from Vinfast Automobile Plant in the first quarter did not meet the plan.

Another important reason is that due to the complex situation of the Covid-19 pandemic, many enterprises which have depended on raw materials imported from China and South Korea have shut down production because they could not import materials. Moreover, many businesses are facing a shortage of human resources, a shortage of high-level experts, because enterprises hire foreign experts, but the experts cannot come to Vietnam due to the pandemic. Therefore, these businesses are currently operating marginally or have shut down some divisions.

In Hai Phong, a number of small and medium enterprises in the fields of restaurant, hotel and tourist companies are also struggling because of a lack of customers. All of these difficulties are the reason why enterprises could not fullfil their tax obligations during this period.

Similar to Hai Phong, Bac Ninh Tax Department is also forcasted to suffer revenue losses in 2020 due to the impact of Covid-19. The report on the progress of budget collection of the Bac Ninh Tax Department showed that, in the first quarter of 2020, the state-owned enterprise sector contributed VND387 billion to the state budget, equal to 27% of the estimate. Although the revenue is equal to 103% compared to the same period last year, in fact, it has suffered revenue loss from many key enterprises in the area.

These include Bac Son Tobacco Company, Hanoi Alcohol Joint Stock Company in Bac Ninh, Vinamilk Tien Son Dairy Factory.

Reporting on the revenue collection, Bac Ninh Tax Department said that due to the impact of Covid-19, in 2020, it is forcasted that the amount of state revenue collection from central state-owned enterprises in Bac Ninh province will reduce by VND215 billion compared to the assigned target.

Currently, many tax departments across the country have forecasted that revenue will be reduced in the future due to the impact of Covid-19, such as Ninh Binh Tax Department, Hung Yen Tax Department, Cao Bang Tax Department. At present, the units also planned to cope with the pandemic, removing difficulties for businesses in order to try to ensure revenue source for the state budget.

Preventing revenue loss in some areas that still have room

Following the directives of the General Department of Taxation, the local tax departments have reviewed and assessed the impact of the Covid-19 on each enterprise, especially in the area where the enterprise has a large amount of revenue contribution. Through analysis and evaluation, it showed that the impact of Covid-19 pandemic on businesses was not small.

According to many economic experts, the Covid-19 pandemic would greatly affect the next quarters of the year. Moreover, in the second quarter, implementing the Government's Decree on extending deadlines of the tax payment and land rent, many households business were not eligible for tax exemption, so they would stop or quit production.

At the same time, some sectors and some enterprises subjected to tax extension, especially land renting, would be extended until the end of the year. Therefore, the second and third quarters would be the peak of difficulties due to the impact of the Covid-19 pandemic. This was only the beginning of difficulties caused by the pandemic for the tax sector.

The General Department of Taxation has instructed units in the industry to conduct detailed analysis in order to closely grasp the situation so that they can have solutions and remove problems in a timely manner. At the same time, continuing to closely follow the directives of the Party committees, local authorities, the guidance of the Ministry of Finance, the General Department of Taxation, the Tax Departments on solutions to support organizations and individuals which are affected by the pandemic; drastically directing the measures to combat revenue loss, striving to complete task of revenue collection with the highest results.

In particular, it is necessary to promote the implementation of solutions in removing difficulties for enterprises, including guiding and facilitate enterprises to effectively manufacture and operate business activities, thereby preventing revenue loss in some areas that still have rooms to secure the revenue source.