Economic hardship leads to budget deficit

Budget revenue in May equal to 62 percent of the average revenue for the previous four months

According to the MoF, state budget revenue in May was estimated at 103.4 trillion VND, equivalent to 62.1% of the average revenue in the first four months of the year (166.5 trillion VND per month).

Economic hardship leads to budget deficit

Domestic revenue, in particular, was estimated to be 80.8 trillion VND, equivalent to 57.9% of the average revenue in the first four months of the year (139.5 trillion VND per month), owing to a decline in production and business activities of some key industries, difficulties in accessing capital, markets, and reduced production orders; depressed real estate market, along with the implementation of policies on tax exemption, reduction, extension, and land rent.

Accumulated in 5 months, state budget revenue was estimated to be 769.6 trillion VND, equivalent to 47.5% of the estimate, or 94% of the estimate for the same period in 2022 (central budget revenue was anticipated to reach 51.2% of the estimate; local budget revenue was predicted to stand at 43.2% of the estimate).

To be more specific, the 5-month domestic revenue was estimated at 638.7 trillion VND, which accounted for 47.9% of the estimate and 97.1% of the estimate for the same period in 2022. Crude oil revenue was estimated at VND 25.6 trillion, equal to 61% of the estimate. Revenue from import and export activities was estimated at nearly 105.3 trillion VND, equal to 44% of the estimate, down 20% over the same period in 2022.

A closer look at the revenues reveals that the land use levy was expected to be 38.6 trillion VND, equivalent to 25.7% of the estimate. Lottery revenue was estimated to be 21.4 trillion VND or 56.9% of the estimate. The State Bank's dividend income, profit after tax, and difference in revenue and expenditure were anticipated to reach 83.4% over the estimate.

The remaining domestic revenue was predicted to be 516.3 trillion VND, equivalent to 48.3% of the estimate, nearly equal to that in the same period in 2022.

The revenue growth has been modest in comparison with the estimate. For example, environmental protection tax revenue was estimated at 20.8%, below the same time last year 47%. In addition, fees and charges were estimated to take up 40.3% of the estimate and down 11.2% from the same period in 2022.

In terms of revenue in the area, it was predicted that 17 out of 63 localities collected above 48% over the estimate during 5 months; 13 out of 63 localities saw revenue growth over the same period while revenues of up to 50 localities were lower than those in the same period.

More than 63 trillion VND allocated to tax, charge, and fee exemptions, reductions, and extensions

In May, tax and customs authorities continued to implement policies to support businesses and people by exempting, reducing, and extending taxes, fees, charges, and land rents.

By the end of May, the total amount of exemption, reduction, and extension was expected to be 63.16 trillion VND (25.16 trillion in exemption and reduction; 38 trillion VND in extension). Simultaneously, it is imperative to strengthen collection management, inspection and examination of taxes, review sources, combat revenue loss, and strive to exceed revenue estimates to offset revenue deficit due to policy implementation; strictly control value-added tax (VAT) refund, ensure compliance with policies and regulations of the law; urge to handle tax arrears collection.

Personal income tax was anticipated to be 50.3% of the estimate, a 5.1% decrease over the same period. Revenue from granting mineral exploitation rights was expected to be 62.8% over the estimate, up 1.6% from the same period last year; other budget revenues were anticipated to be 104.7% of the estimate, a 97.4% increase from the same period last year.

To alleviate business difficulties, stimulate consumer demand, and promote the recovery of production and business activities, the MoF has requested that the Government submit to the National Assembly a 2% reduction in VAT as of 2022. Policy implementation in the last six months of 2023 is expected to decline state budget revenue by approximately 24 trillion VND.

Furthermore, the MoF has requested the Ministry of Justice's appraisal opinion on the Prime Minister's draft decision to reduce land rent in 2023 ( state budget revenue is estimated to decline by approximately 3.5 trillion VND) and the draft Decree extending the deadline for payment of special consumption tax on cars manufactured and assembled in the country (state budget revenue is expected to go down by approximately 11 trillion VND) and then has submitted to the Prime Minister and the Government to consider and promulgate.

Simultaneously, the MoF has sent an official letter requesting that 35 types of fees and charges be reviewed and proposed for reduction to ease difficulties for businesses and individuals, with an estimated remission of 700 billion VND.

In addition to solutions to assist businesses, the MoF has implemented numerous solutions to collect the appropriate and sufficient budget. As of May 15, 2023, the Tax Agency has conducted 14.7 thousand inspections and examinations; inspected 160.5 thousand tax declaration records of businesses; thereby proposing financial solutions of about 20.4 trillion VND, of which the State budget revenue was about 4.7 trillion VND (paid to the budget of about 3.4 trillion VND), reducing deductions and losses by nearly 15.7 trillion VND; urging the collection and handling of tax arrears estimated at 18.4 trillion VND by the end of May.

As of May 15, 2023, the customs authority has carried out 419 inspections, examinations, and handling of state budget revenue of 299.2 billion VND, worked closely with functional forces to combat smuggling, trade fraud, and counterfeiting, arrested 6.54 thousand violators with a total value of goods of 2.12 trillion VND, and handled state budget revenue of 287.9 trillion VND./.