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In 2015, global crude oil prices plunged from USD100 to USD32 a barrel. This obviously affected the contribution from the oil and gas sector to the state budget, falling from 107 trillion to VND 66 trillion in 2014, standing at 67% of the intended target.
The uncertain outlook for the oil and gas sector was clear to the government that have sought measures to reduce the impact on the economy, especially the state budget. Unsurprisingly, some of the shortfall has been passed on to businesses via taxes and other costs.
But Vietnam actually has a low tax environment. Satistics from the Ministry of Finance shows that at present only 15.6% of the state budget comes from taxes and fees in Vietnam, while the ratio is 23% in Thailand, 23.4% in Laos, 24.5% in Malaysia, and 19.5% in India.
Increasing taxes will not necessarily be simple as the country has used the widespread offer of tax concessions to many companies to encourage investment.
National Assembly Economic Committee Vice Chairman Mai Xuan Hung also said that this is a big challenge for Vietnam to serve the rising expenditure on social services and development while the country's economy is still very small, valued at approximately USD 200 billion.
According to the Ministry of Finance, although Vietnam has reduced corporate income tax rates to 20% in 2015 from 32% in 2009, this is is still the biggest contribution from enterprises to the state budget. When small and medium-sized enterprises as well as FDI firms are enjoying tax and fee incentive policies, the state budget is now relying mostly on contributions from large state corporations and groups.
In reality, leading state-owned firms in telecommunications, aviation, and banking sectors including Viettel, Vietcombank and Vietnam Airlines have always topped the list of 1,000 biggest tax contributors (V1000) since 2013.
In 2015, the Vietnam's flagship carrier Vietnam Airlines paid over VND 4.400 trillion in taxes, Mobifone nearly VND 7 trillion, Vietcombank VND2.20 trillion and BIDV nearly 2 trillion.
Military Telecommunication Group (Viettel) have stayed at the top of V1000 for two consecutive years in 2014 and 2015 with VND15 trillion and VND37.30 trillion (USD 1.7 billion), respectively.
In 2016, the government estimated that contribution from crude oil to the state budget would drop to only VND 55 trillion, accounting for 5% of the total state budget revenue.
Therefore, like all the other economies, Vietnam will have to depend on local businesses for a stable state budget as said by head of the National Assembly Committee for Finance and Budget, Phung Quoc Hien.
