The tax department released a report that by the start of October, total domestic tax receipts are officially calculated at 90.77 trillion dong, equal to 83.4% compared with targeted 2004 and up 15% against the same period 2003.
“The possibility to collect domestic tax revenue exceeding 5% of the plan and up 10% against the 2003 amount as prime minister Phan Van Khai instructed at the start of 2004 is realistically feasible”, said Nguyen Dinh Vu, deputy head of the tax department.
The major factor driving the high increase in domestic tax receipts is derived from the big jump in the crude oil price to US$50 a barrel, which brought total crude oil tax revenue in the first nine months this year to 25.25 trillion, equal to 98% of the full year’s target.
However, according to Vu Thi Mai, chief of the tax management and collection department (GDT), total domestic tax revenues (excluding crude oil) is estimated at 65.52 trillion dong, equal to about 79% of year’s target and up 22.5% compared with the year-earlier period.
“At present, 12 out of 16 domestic taxes have reached over 74% of the plan”, said Mai. It is noteworthy that domestic tax revenue collected from foreign-invested enterprises increased 36% year-on-year to 9.9 trillion dong. According to Mai, in addition to collecting corporate income tax of over 560 billion dong from Phu My Hung, the high increase in the domestic tax revenue gained from foreign-invested enterprises is because more than 450 newly established FIEs were granted tax codes and officially started operation.
According to GDT figures, tax revenue from the private sector is estimated at nearly 9.3 trillion dong, equal to 78% of the target and increasing 20.2% yoy.
The result shows that the industrial production value of the private sector in the first months this year also increased strongly estimated to have risen 21.6% to take the lead in he industrial output growth nationwide.
However, the picture of the domestic tax receipts in the first months still contains some weak points. Specifically, total tax revenue collected from state-owned enterprises did not meet targets. The GDT said that in the first nine months this year, total tax revenue from state-owned enterprises only reached 23.15 trillion dong, equal to 68.7% of the target, and a marginal increase of 11.3% compared with the same period last year.
“It is unlikely that SOE tax revenue will reach the target and will end the year at around 12% growth,” predicted a GDT official.
The major cause leading to the low increase in tax revenue from SOEs in the first three quarters is due to less then anticipated industrial production value growth of only 12.2%—the lowest rate of any industrial sector. In addition, the policy on unifying the corporate income tax rate to 28% for all businesses from the previous 32% also caused a shortfall of about two trillion dong in estimated SOE tax revenue in 2004.