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Vietnam garment firms may lose grace period on import duty

Aug '12
Garment exporters in Vietnam are facing a threat of elimination of grace period for payment of duty for import of raw materials and accessories.
The existing Import and Export Tax Law allows a 275-day grace period for payment of duty on import of raw inputs and accessories for production of goods meant for exports.
A draft for revision in Import and Export Tax Law and Tax Management Law contains proposal for ending such deferred payment and necessitates the exporters to pay duty before customs clearance, or furnish a guarantee from a credit institution.
The proposal, if accepted, is believed to bring the legally operating garment enterprise under pressure.
In this connection, the Vietnam Textile and Apparel Association (VITAS) forwarded a letter to the Ministry of Finance (MoF) requesting it to review the proposal.
However, the MoF was firm that if the garment manufacturing companies are not willing to pay taxes immediately, they would have to furnish guarantee from commercial banks.
But industry analysts say that it would not be possible for all the enterprises to fulfil the condition of submitting bank guarantee.
The move, to some extent, is based on the fact that a lot many exporters are presently taking undue advantage of the grace period facility to evade taxes, resulting in problems for tax offices and State budget losses. 
On the other hand, garment exporters question that if it is not possible for the Government to collect taxes from illegally operating or bankrupt firms, how far would it be fair to penalize the law-abiding firms by collecting the taxes from them without giving any grace period.

Fibre2fashion News Desk - India

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