Local firms suggest delaying hike to natural resources tax

Thursday, Sep 10, 2015 08:05

The increase in tax rates is expected to add VND3.17 trillion (US$140 million) to the state budget. Last year, taxes on natural resources exploitation contributed VND38 trillion ($1.68 billion) to the State budget, according to the Ministry of Finance.— VNA/VNS Photo Trong Dat

HA NOI (Biz Hub) — The National Assembly plans to increase the tax imposed on enterprises exploiting natural resources but local enterprises have suggested to the state to consider the timing for applying new rates.

The domestic enterprises expressed their opinion during a meeting convened on Tuesday by the Viet Nam Chamber of Commerce and Industry to elicit the opinion of local firms regarding enhancing the natural resource tax as per a draft decree, amending and adding to the Standing Committee of the National Assembly's Decree 712/2013/UBTVQH13.

Pham Dinh Thi, the head of the Ministry of Finance's Tax Policy Department, said after one year of implementing the decree, regulations on tax rates for natural resources have proven to have certain limitations in protecting, saving and ensuring efficient use of natural resources, especially as Viet Nam integrates into the regional and global economy.

Therefore, the Ministry of Finance has proposed to increase these tax rates by at least 2 per cent for most of the natural resources, including metallic and non-metallic mineral products, he said.

The tax rates will be hiked from 12 per cent to 14 per cent for iron, from 16 per cent to 18 per cent for titanium, from 15 per cent to 17 per cent for gold, from 7-9 per cent depending on each kind of coal to 10-12 per cent, from 11 per cent to 15 per cent for sand and from 10 per cent to 15 per cent for granite.

The increase in tax rates is expected to add VND3.17 trillion (US$140 million) to the state budget. Last year, taxes on natural resources exploitation contributed VND38 trillion ($1.68 billion) to the State budget, according to the Ministry of Finance.

However, the Ministry of Natural Resources and Environment proposes to clearly spell out reasons for increasing the natural resources tax rates and assess the application of existing tax rates in order to protect the interests of the state as well as of the enterprises.

Nguyen Canh Nam from the Viet Nam Mining Science and Technology Association said tax and fee for mineral products have increased in both volume and rates. The increase in tax and fee, together with difficulties faced in exploitation, have resulted in increased production cost, leaving enterprises with lesser revenue and, consequently, lower tax collection value.

Vu Hong, the deputy general director of the Nui Phao Mineral Exploitation and Processing Ltd Company said the tax increase could add to the State budget in the short term but in the long term, the move would actually result in lesser tax collection since a higher tax rate would make enterprises cut down the mineral products' output and thus bring down the tax collection.

Since 1998, tax policies regarding mineral products have undergone many changes, Hong said. This, he added, was not good and creates instability in business environment of Viet Nam.

Any change in tax policy should only make business environment more attractive so that investors flock to Viet Nam, especially to difficult areas, Hong said.

Vu Huong, the head of the tax sub-group at Viet Nam Business Forum, said the increase in the natural resource exploitation tax rate has been suggested at a time when Viet Nam must cut down its import and export tax rates under integration commitments and this will lead to reduces revenues of state budget.

However, the fact is that the local economy, especially the mineral exploitation and processing industry, has been facing many difficulties in production and business, she said. The increase in mineral exploitation tax at this moment is not good. Any increase should be effected over a reasonable period and over a long term after carefully considering the impact of such a move, she said.

Nguyen Van Bien, deputy general director of the Viet Nam National Coal and Mineral Industries Holding Corporation Limited, said in the present situation, the state should continue with the existing rate of mineral exploitation tax. If the state increases this now, revenue of enterprises as well as the income of labour would be affected, leading to lack of investment in production at a time when the market will recover.

Thi said the ministry has collected all the feedback from enterprises on the natural resource tax increase and will also consult the experts to ensure that the interests of the state as also of the enterprises are protected. — VNS

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