Home / Knowledge / News / Apparel/Garments / More trouble in the offing for Vietnamese garment firms
More trouble in the offing for Vietnamese garment firms
Sep '12
Vietnamese garment firms would be facing a lot of hardships if the Ministry of Finance’s (MoF) draft proposal, to end the 275-day grace period for payment of taxes on imported goods meant for making export-oriented products, is actually implemented.
Existing law allows garment firms a 275-day grace period for tax payment. However, the MoF has prepared a draft proposal for amending Article No. 42 of the existing tax law to impose more stringent tax payment rules on enterprises that import raw inputs to prepare products for exports, as well as on those companies that import goods for re-export.
The amended law would require companies to pay taxes in advance, prior to customs clearance.
According to the Vietnam Textile and Apparel Association (VITAS), if the proposal is accepted, it would require Vietnamese garment firms to arrange for US$ 800 million per annum for tax payment. 
Although the enterprises would be able to claim refund later, they would first have to arrange for money to pay tax. As much time would go in administrative formalities to claim the refund, it would also affect the competitiveness of the enterprises.
The draft proposal contains a provision for allowing companies to enjoy the grace period, if they provide guarantee from a commercial bank. However, experts do not consider it as a feasible option as they feel it is almost impossible to obtain bank guarantee due to highly stringent norms. Enterprises would be required to place a deposit, pay fees and would also have to mortgage assets with banks. All this would considerably push up their production costs.
The implementation of the new proposal would also considerably raise the time taken for import of every consignment. It is especially so for garment firms, as they need to import several kinds of materials from different suppliers, and also because these consignments come at different times throughout the year.
If the proposed regulation is approved, importers would lose much time to get their consignments cleared. Meanwhile, any delay in customs clearance would badly affect the production schedules of the enterprises, which would have to bear the consequences of late deliveries.

Fibre2fashion News Desk - India

Must ReadView All

Courtesy: Commonwealth Bank of Australia

Textiles | On 25th Oct 2016

World’s first cotton shipment using Skuchain’s Brackets

The world’s first trade transaction involving shipment of cotton...

Textiles | On 25th Oct 2016

Cotton yield to increase to 568.29 kg/ha in 2016-17: CAB

At its first meeting for the cotton season 2016-17, the Cotton...

Apparel/Garments | On 25th Oct 2016

US most sought after market for UK retailers: Global-e

A majority of the retailers in the UK consider US to be their most...

Interviews View All

Neel Sawhney
One Friday

‘The share of kidswear segment in the online sector is still small in...

Karan Suratwala
Key Textile Accessories Private Limited

Chinese imports are destroying the supply chain

Karan Toshniwal
Orange O Tec

Contemporary industry is paying more and more attention to the...

Suresh Patel
Sidwin Fabric

Sidwin Fabric is a manufacturer and exporter of polypropylene textiles and ...

Marcel Alberts

Coating at a fibre level is a practice not usually seen in the...

Silke Brand-Kirsch
Schlegel und Partner

Silke Brand-Kirsch, executive partner of Schlegel und Partner, a leading...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Tony Ward
Tony Ward

"You have to truly understand what your client wants, know her needs, what ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies

October 2016

October 2016

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Browse Our Archives


Advanced Search