With the Environmental Protection Tax Law providing unclear regulation on what kind of plastic bags are to be taxed, the tax agencies have collected tariffs from many plastic manufacturers whose products may not be subject to the new tax rules.
At the press briefing held by the Vietnamese Plastic Association (VPA) last week, many plastic bag and packaging manufacturers said that plastic bags and packaging of many varieties are being taxed, putting their production into a tough spot.
As of January 1, 2012, a tax rate of up to VND50,000 (US$2.4) is imposed on every kilogram of plastic bags from HDPE, LDPE or LLDPE, with the government aiming at a 40-percent reduction of their use at supermarkets and shopping centers nationwide by 2015.
Meanwhile, bags that are already packed with the products and those “meeting environmentally-friendly standards” are exempt from the tax.
With such vague and generalized regulation, it will be hard for tax collectors and tax payers to see eye to eye, VPA said.
Pham Trung Cang, CEO of Tan Dai Hung Co, said his company is making the environmentally-friendly bags from PP and BOPP plastics for exports, and fertilizer bags from PP and PE for local fertilizer plants.
“However, according to the tax agencies’ understanding of the environmental tax rule, all of the above products are taxed VND40,000 a kilogram,” Cang said.
“Tax officials impose tariffs on all products containing PE in the product component, or those belonging to the packaging category.
“This is a case of tax over-collection.”
Cang said with his company capable of producing 8,000 tons of packaging a year, the total collected tax could be as much as VND320 billion.
The company also had to supply its products to fertilizer and chemical makers at higher prices. Consequently, his customers said they would switch to imported products for lower prices, Cang lamented.
Nguyen Xuan Hung, director of Tien Thanh packaging maker, said due to taxation, his products are now being sold at prices nearly double those produced by Thai and Chinese rivals imported to Vietnam.
“Will we be able to survive?” he said.
Nguyen Van Kha, CEO of Tien Hung JSC, attributed the lack of circulars providing guidance on the Environmental Protection Tax Law to the fact that tax agencies in different localities understand the rules differently.
Thus, they just collect the tax first, and any complaints or issues are dealt with later, Kha said.
A plastic manufacturer said he had called the Ministry of Natural Resources and Environment to ask for the particular standards in order for a material to be deemed “environmentally-friendly” as stated in the ministry’s tax regulations.
“However, the ministry said it has yet to know what the specified standards are,” he said.
“Even the ministry does not know, so how can agencies of lower levels?”
Plastic bags and packaging makers said they are willing to pay tax for the sake of protecting the environment, but the regulations should be clearer.
Ho Duc Lam, deputy chairman of VPA, said the association will continue to petition the relevant agencies to ease manufacturers’ difficulties.
“Specifically, VPA suggested that plastic packaging be temporarily exempted from the environmental protection tax until the rules become more complete,” Lam said.
