Tariff exemption contributes to shortfall
Tariff exemption contributes to shortfall
Tariff exemptions and revenue leaks have been blamed for contributing to the country’s revenue shortfall over the past six months of this fiscal year.
Minister of Finance Dr Lien Thikeo was speaking at a meeting in Vientiane this week, highlighting issues surrounding the shortfall.
He said the tariff exemption recorded at border checkpoints in Vientiane and the provinces reached 996 billion kip in the past six months of the 2014-15 fiscal year.
The shortfall was also related to the illegal import of vehicles and declining income from the mining sector which is considered a major source of Lao revenue.
In 2013-14, the revenue from fuel and vehicle import duties had fallen to 66.08 percent, a sharp decrease from the 75.36 percent in the previous year.
Officials who asked not to be named laid some of the blame at the feet of projects who had intentionally overestimated their fuel importation needs only to profit from selling the excess to fuel refilling stations.
Collection of tariffs on imported vehicles was also affected, with importers taking advantage of differences in rates that apply at different border checkpoints connecting the landlocked country to its neighbours.
The Ministry of Finance is working to collect taxes and obligations from companies that have not been paid to the national budget by enterprises amounting to 400 billion kip.
Another significant feature to note is that many companies (both small and large) have tried to avoid paying taxes to the government via various means.
The revenue from mining declined from over 1.6 trillion kip annually in the previous years to just only 518 billion kip this year.
The Ministry of Finance has said that the government did not receive profit tax and dividends from Phu Bia, one of the largest mining companies operating in Laos. Meanwhile many other companies reported that they lost profits so that they did not have to pay taxes to the government.
The Ministry of Finance has identified numerous loopholes in the accounting of timber sold by local authorities, meaning that the government has been missing out on much needed revenue.
The ministry has set the target to collect revenue of 100 billion kip from the sale of its timbers for the 2014-15 fiscal year but in the past six months of this fiscal year only 13 billion kip was collected.
The revenue was not paid back to the national budget by local authorities but instead the local authorities spent the revenue for other purposes.
Over the past six months of 2014-15, revenue collection reached 12 trillion kip, equal to 46.5 percent of the yearly plan while expenditure reached 13.8 trillion kip, equal to 45 percent of the annual plan.
The revenue shortfall has also resulted in the slow payment of officials’ salaries and affected development projects in Laos over the past years.
