Tax authorities expect increased revenue hinh anh 1A woman pays taxes at the Hanoi Tax Department. (Source: VNA)

Hanoi (VNA) Tax authorities anticipate collecting at least 680 billion VND (30.4 billion USD) in the remaining ten months of 2016, a 19 percent increase over the same period last year and seen as a sign that the Vietnamese economy is continuing to recover.

Yet, collecting these taxes is expected to require great efforts by tax agencies, since global oil prices remain low and many regions face severe droughts and saltwater intrusions, Nguyen Dai Tri, Deputy General Director of the General Department of Taxation, said at a press conference on March 25.

According to Vu Hong Long, Director of the Department for Tax Revenue Estimation, every drop of 1 USD in oil prices results in a loss of 1.5 trillion VND to the State budget. He further said, if oil prices drop to 30 USD per barrel, budget revenues could decrease by 45 trillion VND, compared to the current estimate.

Long noted that the department has created plans to cope with the possibility of further drops in oil, even to 20 USD per barrel, to ensure the budget remains balanced.

Although oil prices are unpredictable and tax revenues from crude oil account for a modest percentage in the central budget, Long said that revenues from oil cannot be eliminated from budget revenue estimates.

Regarding the option of temporary closings of oil fields in case oil prices continue to fall below production costs, Nguyen Van Phung, Director of the Large Taxpayers Office, said this action will demand careful consideration. Sometimes, firms should accept short-term losses, since the resumption of operations of oil fields could be very costly. Phung noted that the Government will not provide compensation for losses sustained by high-cost oil companies.

Phung also said that plunging oil prices are not all bad news, as firms could benefit from lower fuel prices by earning higher profits. This will also mean higher collections of value added taxes and corporate income taxes for local budgets.

Additionally, taxation general department statistics revealed that tax revenues for the State budget reached 145.75 trillion VND in the first two months of this year, equivalent to 17.4 percent of the estimate for the full year and rising by 6.1 percent over the same period last year.

Meanwhile, collections from crude oil were 5.77 trillion VND, equal to only 43.1 percent from the same period last year. Oil prices hovered around 30 USD per barrel in the two-month period, while the price for budget estimates was set at 60 USD per barrel.

The taxation department said that in the remaining months of this year, it will hasten administrative reforms and the implementation of e-tax filing and payments, as part of a wider effort to improve the business climate and remove difficulties for firms.-VNA