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Draft to remove grace period on import tax blasted

Draft to remove grace period on import tax blasted

Tuesday, October 16, 2012, 11:18 GMT+7

Seafood exporters and processors have expressed their objections towards a draft decree that aims to remove the grace period on import duty payments for raw materials and accessory imports. The draft was open for feedback at a meeting held by the Vietnam Association of Seafood Exporters and Processors (VASEP) on Monday, where it was strongly criticized as unreasonable by delegates who said they were surprised to learn of the new policy. Under the current Import and Export Tax Law, seafood businesses that import raw materials for the production of their future exports are allowed to receive a 275-day grace period on duty payments for their imports. A grace period is a time past the deadline for an obligation during which a late penalty that would have been imposed is waived. But the bill, developed by the Ministry of Finance, is now seeking to remove this incentive, and stipulates that the businesses should pay import taxes before customs clearance, or have to provide a guarantee from a credit institution to be able to enjoy the grace period. “It’s extremely irrational,” said Nguyen Van Hoa, CEO of Saigon Food. Hoa even demanded to “meet the draft composers in personal to clarify everything.” VASEP said the grace period removal will place a huge negative impact on local seafood exporters and processors. The seafood sector imports some US$600 million worth of raw material on an annual basis, and with the import duty currently set at 20 percent, the tax payment that will not enjoy the grace period will be $120 million. Meanwhile, if seafood businesses apply for the guarantee from credit institutions to receive the grace period, they will have to pay a 2.5 percent fee. Hence, if the bill is legalized, the tax collection will not increase, but businesses will have to lose more expenses on the guarantee fees, the association concluded.Same for garment sector In August the same removal was proposed to be applied to the garment sector, whose companies reacted similarly to the seafood firms. The move partly stems from the fact that many exporters are taking advantage of this rule to evade taxes, causing difficulties for tax offices and state budget losses, according to Vietnam News. The VNS agency also quoted Dang Phuong Dung, deputy chairwoman of the Vietnam Textile and Apparel Association (Vitas), as saying that the association had sent a document to the Ministry of Finance asking it to reconsider the proposal. The ministry, however, has determined that “if enterprises did not want to pay taxes immediately, they should ask commercial banks for a guarantee,” the newspaper said.

Tuoi Tre





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