Seafood companies that import raw materials for processing exports have asked the Government to extend their 275-day grace period for paying import duties.
The grace period is allowed under the Import and Export Tax Law for companies that import raw materials and accessories for production of goods for export.
The Ministry of Finance, however, has recently compiled a draft on the revised Tax Management Law that requires companies to pay tax before customs clearance, or provide a guarantee from a credit institution before they can secure the 275-day grace period.
Speaking at a seafood-industry conference held in HCM City yesterday, Nguyen Hoai Nam, deputy general secretary of the Viet Nam Association of Seafood Exporters and Producers (VASEP), said many industries that rely on imported materials, especially seafood, electronics, footwear, and textiles and garments, were surprised about the draft's content.
Most seafood companies have to import materials since local sources only meet 60 to 70 percent of their production capacity.
Conference participants said that companies would encounter more financial difficulties and would have to scale down production if the changes to the grace period were approved.
They also pointed out that banks charged 2 to 3 percent a year for guarantee fees, plus interest rates, pushing up production costs and product prices, affecting the competitiveness of Vietnamese goods.
Nam said Vietnam imports about USD 600 million worth of seafood materials each year. With an average tax of 20 percent, seafood companies would have to pay a total of USD 120 million a year in taxes.
If the Finance Ministry's proposal is approved, importers would have to pay an additional cost of USD 3.36 million in bank-guarantee and interest rate fees, Nam said, adding that this was unreasonable.
VASEP sent a letter to the General Department of Customs under the ministry, asking that the proposal be shelved.
