Garment makers seek VAT cut

HA NOI (VNS)— The Viet Nam Textile and Apparel Association has proposed that the Government exempt textile enterprises from the value added tax (VAT) for three to six months to stimulate both domestic and export consumption.

Under the proposal, the association also expects the VAT refund rate on goods of clothing exporters to increase from the current 10 per cent to 15 per cent.

Besides, the association said, textile enterprises were looking forward to a successful negotiation from Trans-Pacific Strategic Economic Partnership Agreement (TPP) to expand into new markets, especially the US market. With the agreement, exporters could enjoy a tax reduction of 16-18 per cent, with some items even seeing an export tax of zero per cent.

The association said that the export market for Vietnamese textile products has been narrowed and faced fiercer competition in light of the global economic slowdown. Domestic textile exporters were concerned about a reduction in export orders during the last months of the year, the association said.

The association's general secretary Dang Phuong Dung said that the industry's export turnover surged 7 per cent to US$9.72 billion in the first eight months of the year. However, the industry also faced a shortage of export orders.

Dung said that it was difficult for textile enterprises, especially small- and medium-sized ones, to arrange capital and seek orders to develop production. Without orders, declining income and a shortage of workers are causing more difficulties for enterprises.

Local textile exporters said that a rise in sale prices could not compensate for a hike in input costs as most of their turnover was spent on imported materials and other input costs.

In addition, exporters also worry about the termination of the 275-day tax grace policy for imported materials, which will make it more difficult for them to maintain production levels while the recession continues. — VNS