Local textile firms are protesting the environment taxes levied on plastic bags used as packaging for their export products.
There is currently no clear regulation on tax refund for imported plastic bags that are later used in export products, while locally produced bags are not exempt from taxes, according to Dang Thi Phuong Dung, general secretary of the Vietnam Textile and Apparel Association (Vitas).
Local bag producers are pricing up their products from VND40,000 to VND80,000 or even VND100,000 per kg, as the absolute tax sum on plastic bags ranges between VND30,000 and VND40,000 a kg.
While the Government has policies to promote the use of domestic materials, the recently effective Environment Tax Law has accidentally pushed up production costs of textile firms since they have to use plastic bags for export products.
According to Dung, the association has received many complaints from textile companies.
Previously, materials used for export products which have been already subject to import taxes, will receive tax refunds within 9 months, while materials for processed products are tax-exempt.
But environment taxes must be paid right at the time of the import, making it difficult for firms to reduce product prices and increase competitiveness.
She cited a petition from Hung Yen Garment Joint Stock sent to relevant agencies seeking delay and refunds of environment taxes for PE bags used for export.
Nguyen Xuan Duong, general director of Hung Yen, said his company used PE plastic bags made from LDPE and LLDPE supplied by local as well as foreign producers to pack their export products.
He estimated Hung Yen alone consumed 6 million plastic bags originating in Vietnam for packaging which cost US$400,000 last year. The figure is US$600 million for the whole industry.
As the tax levied on plastic bags almost matches the value of such products, the total tax sum that the garment industry shoulders this year may amount to hundreds of millions of US dollars.
Under Circular 152/2011/TT-BTC which took effect early this year, PE plastic bags are subject to environment taxes.
“Such expenses have pushed up processing costs, and dampening business competitiveness,” Duong said in the petition.
“Meanwhile, to reduce product prices, customers will choose imported goods to replace locally produced PE bags. This will increase trade deficit, impact the trade balance and push local PE bag producers to the verge of bankruptcy, adversely affecting the support policy for domestic material supply.”
He thus proposed to the Prime Minister, the Ministry of Finance and the Ministry of Industry and Trade to reconsider the environment taxes applied to local PE plastic bags used for packing export apparel products. Specifically, he recommended tax refunds or exemption for domestically produced PE bags.
