Vietnam turns to taxes, state borrowing to finance growth push

VIETNAM plans to step up tax collection and state borrowing in 2027, reducing its reliance on banks to finance a major infrastructure drive that is key to its bid for double-digit economic growth.

The National Assembly on Monday (Nov 9) approved a resolution setting the 2027 budget deficit at 739.6 trillion dong (US$28.9 billion), equivalent to 4.5 per cent of gross domestic product, according to the government website.

That is higher than a target of 4.2 per cent of GDP for 2026.

Parliament aims to increase 2027 state revenue by 9.1 per cent, compared with 2026, while calling on the government to intensify efforts to combat transfer pricing and tax evasion, and to recover outstanding tax debts, according to the post.

The government is also tasked with broadening the tax base, particularly by strengthening collection from e-commerce, digital platform-based businesses, and mining. 

Vietnam is diversifying its funding sources as ambitious growth targets and a sweeping infrastructure campaign stretch a banking system that already plays an outsized role in financing the economy.

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The nation is targeting at least 10 per cent economic growth, but officials have warned of significant challenges, including mounting inflationary pressures and increasing demand for capital and energy.

Higher revenue targets could increase pressure on small businesses and households, with higher tax liabilities, compliance costs and more intensive enforcement potentially undermining private sector growth and consumption.

About 56,300 businesses closed in the first ten months of 2026, more than double the number in the same period in 2025, according to state media.

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A Vietnam Chamber of Commerce survey of 1,001 household businesses conducted in April found that tax compliance remains a top concern: 93 per cent cited difficulties with tax procedures, 92 per cent pointed to accounting requirements and a similar number expressed concern about higher taxes and fees in 2026.

State borrowing is also projected to increase by around 30 per cent in 2027 to 1,280 trillion dong, according to a separate parliamentary document, which does not elaborate on the sources of borrowing.

The Finance Ministry has been in talks with international banks about a potential sovereign US dollar bond sale of up to US$1 billion.

That would be the first such offering since 2014, though officials have been discussing the issuance for months without setting out a timeframe.

The higher deficit and borrowing targets underscore the need to increase state revenue while balancing government support to boost businesses.

Finance Minister Ngo Van Tuan has estimated tax exemption and reduction policies in 2026 will total about 240 trillion dong, while tax payment extensions are expected to be around 120 trillion dong, according to the ministry’s news website. BLOOMBERG