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Why Vietnam’s Paper Industry Is Demanding Tax Reform Now
Vietnam recycles over 3.5 million tonnes of waste paper annually, providing a vital source of raw materials for packaging paper—a sector seeing surging demand driven by e-commerce, logistics, and the shift away from plastic.
However, an unexpected barrier is holding back domestic recycling: tax and regulatory bottlenecks that disadvantage local collection compared to imports.
According to recent discussions between industry leaders and the Vietnam Paper and Pulp Association (VPPA), updating tax policy would deliver huge wins for existing paper manufacturers:
🔹 Leveling the Playing Field on VAT Currently, manufacturers buying domestic waste paper from small suppliers cannot deduct input VAT, treating it purely as an unrecoverable cost. Meanwhile, imported waste paper qualifies for VAT deductions. Updating these rules will immediately make local recycled paper financially competitive.
🔹 Slashing Administrative Friction The domestic supply chain relies on thousands of informal collectors who don’t issue electronic invoices. By adopting a centralized tax withholding mechanism, manufacturers could generate electronic purchase records and pay taxes on sellers’ behalf—giving mills compliant cost documentation without drowning in paperwork.
🔹 Unlocking Working Capital Current environmental rules require paper mills to tie up 15% to 20% of a shipment’s value in environmental protection deposits when importing raw material. Lowering deposit rates and adopting a risk-graded system means compliant businesses with clean track records can use bank guarantees instead, freeing up significant operational cash flow.
💡 The Big Picture: Aligning tax policy with circular economy goals ensures that recycling locally is just as efficient and cost-effective as relying on foreign scrap.
Original post from Vietnamnet
