2018 an unforgettable year for financial sector

Saigon Times/VOV

The year 2018 ended with many remarkable events occurring in the financial sector, including the higher-than-expected State budget revenue, the hike in environmental protection tax, and the property tax proposal, among others.

Higher-than-expected State budget revenue

According to a report by the Ministry of Finance, the State budget revenue from January-November reached over VND1,220 trillion (US$52.7 billion), or 92.7% of the full-year target, and up 15% year-on-year. Of which, the revenue of the customs agencies in the 11-month period was equal to 100.3% of the estimate.

Also, the ministry expected to collect nearly VND1,400 trillion in taxes and fees last year, up 3% over the estimate.

Property tax proposal

Earlier in 2018, the Ministry of Finance introduced a draft property tax law in which homes valued at more than VND700 million would be taxed 0.3% or 0.4%.

The proposal raised strong public opposition, as land and house owners would be subject to a 10-fold increase in land use fees.

Further, each household may have to bear an extra VND1.3 million in tax per year if the proposal is passed, according to the Vietnam Institute for Economic and Policy Research.

Meanwhile, National Assembly General Secretary Nguyen Hanh Phuc said the law-making body would not look into the draft law on property tax until the end of 2019.

Provision of bank account information to taxman

Another proposal that faced strong objections from experts, lawyers and business associations is the proposal on the revised Law on Tax Management that requires banks to provide details of their clients’ accounts to tax authorities.

The proposal states that commercial banks are responsible for providing bank account details of taxpayers, including personal information, transactions and account balances, to tax authorities within 10 working days upon receiving a request.

The regulation, if approved, could lead to abuses of power by tax authorities, said those who objected.

As a result, the draft revised law publicized in August last year did not include this controversial proposal.

Environment tax hike for fuels

It will be a mistake if the hike in the environmental protection tax on fuels is not listed. Last month, the NA passed a resolution raising the environmental protection tax on fuels, which comes into force today, January 1st.

Accordingly, each liter of gasoline is subject to an environment protection tax of VND4,000, up from the current VND3,000. Additionally, the new tax on diesel oil, heavy fuel oil and lubricants is VND2,000 per liter.

Speaking at a press briefing of the Government in April, Deputy Minister of Finance Vu Thi Mai said the proposal on the tax hike is based on a resolution of the Politburo on the State budget restructuring to ensure the nation’s financial security and reduce environmental pollution.

Plunge in Vietnam’s tax payment index 

According to the World Bank’s Doing Business 2019 report, Vietnam dropped 45 places to the 131st position in terms of tax payments last year. Meanwhile, the previous year witnessed a jump of 81 spots.

Dinh Thi Quynh Van, general director of PwC Vietnam, attributed the drop to changes in value-added tax refund policies.

Additionally, it remained time-consuming for local enterprises to make tax declarations, Van said.

E-invoice use

Household businesses in the agro-forestry-fishery industry and construction sectors, employing 10 workers or more and having revenues of from VND3 billion in the previous year, as well as those in the trade and service sectors generating revenue of VND10 billion and over, will be required to begin issuing e-invoices.

Ta Thi Phuong Lan, deputy head of the Personal Income Tax Management Department under the General Department of Taxation, said the regulation is aimed at encouraging household businesses to convert to become more professionally operated firms.