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Inspecting FDI Companies: Collecting VND200 Billion of Taxes in Arrears (13/11)

15/11/2013 - 17 Lượt xem

As of September 2013, the tax sector had checked entire business results of 122 enterprises in 23 provinces and cities in five straight years from 2007 to 2012. According to the results, these companies were forced to revise down losses, equivalent to VND2,252 billion. Specifically, the decreased loss of VND1,870 billion was transferred to the inspected taxing period and the tax recollected was VND335 billion. Hence, the total taxable income of these FDI enterprises was added VND2,599 billion. Of the sum, taxable income for the taxing period after the inspection (from 2013 onwards) was VND839 billion. Most of these companies are engaged in garments, textiles, leather, footwear, food processing, real estate and construction. These are all labour-intensive companies and a falsified increase of employees is a way to trim corporate income tax.

Hanoi recollected VND98 billion of taxes from pricing-transfer FDI companies, followed by Ho Chi Minh City with more than VND15 billion, Thai Binh with more than VND7 billion, Quang Ninh and Lam Dong with more than VND5 billion, and Haiphong with VND1.3 billion.

The largest amount of losses revised down was found in Ho Chi Minh City with VND362 billion. Hanoi saw the value of increased taxable income of FDI companies with more than VND1,223 billion, biggest in the nation.

Before this inspection, the General Department of Taxation performed a general review in 5,531 FDI enterprises, accounting for nearly 60 percent of FDI enterprises operating across the country. The picture of corporate profits and losses is showing signs of worrying.

Among 5,531 FDI enterprises checked, up to 3,175 enterprises had accumulated losses to the time of assessment, accounting for 57.4 percent of the total. Specially, 529 enterprises reported losses amid increasing revenue, focusing in such industries as textile, garment, footwear, business support service, processing and preservation of agricultural, forestry and aquatic products. While declaring losses and requesting tax refunds, these FDI companies kept expanding their production and business scales. Meanwhile, in the same production and business environment, other domestic independent companies still made a profit and paid corporate income tax.

Many provinces and cities have attracted a lot of FDI enterprises but about half of them usually posted losses. In Ho Chi Minh City, loss-making companies usually operate in export-driven production and processing. Currently, the city has 3,281 active FDI enterprises but more than a half of them have declared losses. In Danang, as of December 31, 2012, up to 69 out of 157 FDI active enterprises regularly reported losses.

The General Department of Taxation said signs of transfer pricing have been detected for years. In 2005, the Ministry of Finance issued the Circular No. 117/2005/TT-BTC guiding market price determination in arm’s length transactions. However, from 2006 to 2009, the Ministry of Finance hardly handled any transfer pricing cases. As a result, transfer pricing situation is getting increasingly complicated, causing a considerable loss in State budget incomes. Hence, to facilitate the business community to pay taxes, the tax sector will inspect companies with signs of tax violations and strictly handle tax evasion or tax fraud.