(KTSG Online) - If the import tax on polypropylene (PP plastic pellets) is increased from 3% to 6%, domestic plastic enterprises will have to bear an additional cost for the next 5 years in the billions of VND. With the plastic industry already impacted by the Covid-19 pandemic, the proposed tax hike would be a "knockout blow" to the plastic sector, according to comments from the Vietnam Plastics Association.
The Vietnam Plastics Association recently sent a letter to the Government and several ministries and agencies, proposing not to increase the import tax rate on polypropylene (PP plastic pellets) from 3% to 6% and 6.5%.
According to the explanation from the Vietnam Plastics Association, the total actual supply of raw materials for the plastic industry from 3 production plants only reaches 550,000 tons/year. Meanwhile, the estimated demand for PP plastic raw materials that the plastic industry will consume from 2021-2025 is expected to be between 2 to 2.9 million tons/year.
With such large consumption while domestic supply cannot meet the demand, it is inevitable for plastic enterprises to seek imported PP raw materials from abroad.
Similar to many other businesses in various industries, plastic enterprises are facing difficulties due to Covid-19.
At the current import prices, if the import tax is increased from 3% to 6%, the additional tax costs that plastic enterprises importing from countries such as the Middle East, Japan, South Korea, and China...are estimated to be over 3,000 billion VND for the next 5 years.
Like many other businesses in various industries, plastic enterprises are facing difficulties due to Covid-19.
With the increase in import taxes, enterprises may switch to purchasing PP raw materials from FTA member countries. However, Vietnamese enterprises will not be able to purchase PP raw materials at the same price as before (although the import tax rate from this region is 0%) because sellers will raise prices corresponding to those of countries outside the FTA region.
According to calculations, the additional costs that enterprises would have to pay to countries in the FTA region over the next 5 years are estimated to be 6,984 billion VND. The state will not collect any of these costs, and all of this amount will benefit FTA member countries.
If the import tax is increased from 3% to 6%, domestic plastic enterprises will bear a very large additional cost. In that case, plastic enterprises will not dare to invest and expand production and business.
The Vietnam Plastics Association believes that under the impact of the raging Covid-19 pandemic at this time, increasing taxes will be a "knockout" blow to the entire plastic packaging industry in particular and the plastic industry in Vietnam in general.
Currently, enterprises are struggling in extremely difficult situations to maintain production under the conditions of "three on-site" and "one route, two destinations". Therefore, the Vietnam Plastics Association proposes that the Government and relevant agencies consider not increasing the import tax on PP raw materials to 6% and 6.5%, but instead maintain the current import tax rate on PP plastic raw materials at 3%.
Source: Kinh te SG
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