‘Rag traders' seek more aid
‘Rag traders' seek more aid
The textile and garment industry has petitioned the Customs to continue its 275-day grace period for paying import duties.
Enterprises were struggling to avoid losses as input costs kept rising, said Viet Nam Textile and Apparel Association (Vitas) general secretary Dang Phuong Dung.
Dung said the removal of the grace period would add to company burdens. She estimated that garment companies would have to find a total of US$800 million a year to pay taxes and would get tax refunds much later.
She said that two recent drafts suggested by the General Department of Customs and the Ministry of Finance for the revised Import and Export Tax Law and Tax Management Law were challenging Vietnamese enterprises.
One such draft requires enterprises to pay tax before customs clearance, or provide a guarantee from a credit bank before they can secure the 275-day grace period on duty payment. The other draft proposed by the ministry bans the grace period altogether.
Dung argued that "if the proposal is rejected, Vietnamese manufacturers are likely to encounter financial troubles which could mean they have to limit operations to subtract products rather than creating finished ones. As a result, more work will be required in order to make a normal profit."
Enterprises would be discouraged from implementing free-on-board (FOB) contracts, under which enterprises get involved directly in importing materials, design and distribution, and return to doing outwork for foreign companies.
Vinatex Group deputy director Duong Thi Ngoc Dung said if the grace period on duty payments was removed, the export prices of textile and garment products would have to be increased from 8 to 16 per cent, making the export trade more difficult. She said garment exports were showing signs of slowing down in major markets such as Europe, the United States and Japan because of declining demand, although export turnover hit more than $10 billion in the first nine months of the year.
This was an increase of 7 per cent compared to last year, but still below expectations, Dung said.
Recently, the association called for exemption from value-added tax for three to six months to accelerate domestic and export consumption.
Nguyen Anh Ngoc, CEO of Sai Dong Garment Co, said FOB contracts required manufacturers to buy materials, create design and sell finished products to targeted foreign importers by a set deadline. "The company can meet more demand by doing all this themselves, meaning employees earn more because they have more work to do," he added
Ngoc agreed that the grace period was necessary for textile enterprises.
"We are unable to immediately pay the high value added tax (VAT) which is up to 10 per cent", said Ngoc "This tax could be better used for implementing FOB contracts."
Dung also questioned the credit bank guarantee compromise, asking how an enterprise can secure such guarantees when new shipments are constantly arriving.
She hoped the proposal of the 275-day grace period on duty payment would be soon approved by the government.
vietnamnews
