If taxed, will Chinese traders be able to control the farm produce market?
Chinese traders buy farm produce from Vietnamese businesses, but don’t pay tax. As a result, VASEP has sent a dispatch to the Ministry of Finance, proposing to tax Chinese traders.
The association pointed out that the legal documents do not comprise provisions on tax collection from foreign traders who collect farm produce directly from Vietnamese farmers. The legal loophole not only leads to the fact that the State loses a source of revenue, but also to big problems in the farm produce market.
Vietnamese businesses in recent years have repeatedly complained that they have to compete fiercely with Chinese traders to collect materials from farmers. Since Chinese traders don’t have to spend money to support farmers’ production, they accept to pay higher than domestic businesses to scramble for materials.
And since Vietnamese businesses cannot collect enough materials, they fail to fulfill the export contracts signed with foreign partners.
In fact, this is not the first time VASEP proposes to tax Chinese traders. In the past, it once asked the Ministry of Finance to import export tax on fresh shrimp exports, saying that taxation would help prevent Chinese traders from collecting shrimp and export fresh shrimp without professing or freezing.
Vietnamese businesses in recent years have repeatedly complained that they have to compete fiercely with Chinese traders to collect materials from farmers. Since Chinese traders don’t have to spend money to support farmers’ production, they accept to pay higher than domestic businesses to scramble for materials.
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| Vietnamese businesses in recent years have repeatedly complained that they have to compete fiercely with Chinese traders to collect materials from farmers. |
In fact, this is not the first time VASEP proposes to tax Chinese traders. In the past, it once asked the Ministry of Finance to import export tax on fresh shrimp exports, saying that taxation would help prevent Chinese traders from collecting shrimp and export fresh shrimp without professing or freezing.
VASEP’s secretary general Truong Dinh Hoe said that it was necessary to tax Chinese traders because of the unhealthy competition they create in Vietnam. Chinese traders collect shrimp in Vietnam through Vietnamese merchants and export products across the border gates, through unofficial channels, and don’t bear any tax in Vietnam.
“Chinese traders collect shrimp in Vietnam not only to export, but also sell in the domestic market,” he said.
“They buy everything, including low-quality materials, which will affect Vietnam’s prestige,” he said. “They accept the shrimp injected with impurities as well, paving the way for some farmers to commit trade fraud."
The idea of VASEP's has been applauded by many businesses. In principle, Chinese traders who do business in Vietnam and earn money in Vietnam must observe the Vietnamese laws, and pay tax like Vietnamese businesses.
However, how to collect the tax will not be simple.
Hoe also said taxation bodies can supervise Chinese traders and tax them if they collect materials and sell later in the Vietnamese market. However, it would be difficult to collect taxes in case Chinese traders export products under the names of Vietnamese traders.
According to Tran Xoa, director of Minh Dang Quang Law Firm, any tax policy must be applied to all businesses, with no discrimination for foreign or domestic ones. “Therefore, there is no ground for taxing foreign traders,” he said.
