Tax revenues below expectations

State tax revenues in the first quarter of the year fell below expectations, reaching 86% of the target set for the quarter, according to the General Department of Taxation.

The department has targeted to collect VND200 trillion (US$12.4 billion) in taxes this year, of which VND150 trillion ($9.3 billion) would come from domestic business taxes. However, tax collections in the first three months were only VND42 trillion ($2.6 billion), or 21% of the year’s target.

The shortfall was largely attributable to increased business costs, rising costs of energy, raw materials and equipment, which ate into corporate profits by causing an overall rise in input costs nationwide of VND1.3 trillion (nearly $81 million). As a consequence, corporate income tax collections were off VND370 billion ($23 million).

In early March, petrol prices went up VND900 per litre, raising costs for goods and services such as transportation.

Industrial sectors dependent on coal were greeted with costs for coal 20% higher than last year’s, and costs for thermoelectric generation grew VND730 billion ($45 million).

The higher costs of transportation, coal and electricity drove up the costs of steel, iron and fertiliser accordingly.

The tax deparment calculated that recent upswings in the prices of many goods would raise industrial input costs by VND5.2 trillion ($324 million) for the year.

Meanwhile, the prices of some consumer goods such as household electronics, appliances and motorbikes fell under the competitive pressures of international integration, causing a further reduction in tax collections estimated at VND100 billion ($6.2 million).

In particular, motorbike prices fell an average of VND348,000 ($22) generating a loss in tax revenues of VND68 billion ($4.2 million).

Source: VNS