HA NOI — The capital city Ha Noi is feeling the pressure this year to meet its target of tax contributions to the State budget of VND132 trillion (US$6.28 billion), an increase of 22 per cent over last year.
Phi Van Tuan, head of the municipal tax department, said the goal would be difficult to achieve in the context of the economic downturn in particular and with many businesses forced to trim production due to high interest costs connected to bank financing.
Meeting the goal would require the department to collect 21 per cent more taxes from State-owned enterprises (SOEs) and 29 per cent more from foreign-invested enterprises, while tax collections from the domestic private sector would have to rise by a whopping 36 per cent.
Deputy Minister of Finance Do Hoang Anh Tuan said higher tax collections from the private sector would be particularly difficult since many companies already owed back taxes worth a combined VND1.5 trillion ($71.4 million).
Tuan said businesses have paid VND220 billion ($10.4 million) a year at annual interest of 20 per cent while their profits were only VND75 billion ($3.6 million).
Additional tax collections would be complicated by the effect of tightened public spending on production and business activities, he said. Tighter monetary policies would not only affect the property market but construction, steel production, cement and building materials.
The department has assigned every unit to estimate tax collections to ensure the target and has reviewed the capacity to pay taxes of each district and production and business sector.
The department would audit businesses which make significant tax payments to the State budget, including commercial banks and other credit institutions and telecommunications businesses, which together account for 60 per cent of all of the city's enterprise tax collections.
Firms operating in the real estate sector would also be supervised for their project scale, construction progress and disbursements.
The department would also increase audits at all enterprises to prevent tax fraud. – VNS