Binh Minh Plastics to pay back taxes

Speaking at tax dialogue with enterprises in Ho Chi Minh City, Deputy Minister of Finance Do Hoang Anh Tuan said the company would have to pay its tax arrears to begin with, then it could complain to Ho Chi Minh City Taxation Department if it did not agree with the results of the investigation.

So far, 95 per cent of investigation on tax arrears collection has proved correct, with only 5 per cent subject to appeal, a move that has received complaints from enterprises, mainly related to administrative violations on late payment, he added.

The Ho Chi Minh City Department of Taxation had recently asked the Binh Minh Plastics JSC to pay tax arrears of up to VND117.11 billion ($5.57 million), including VND74.98 billion ($3.57 million) in tax arrears and VND42.13 billion ($2 million) in fines for administrative violations, according to the local tax authority's investigation result in October 9 for the 2009-2012 period.

Nguyen Thi Kim Yen, deputy general director of the company, complained that her enterprise has suffered from the “jumble of unclear legal documents.”

“It’s not our fault. This should be blamed on the differences in the legal documents which regulate the corporate income tax incentives and the tax on the enterprises which list their shares on the bourse for the first time,” Yen said.

Specifically, in February 2004, Binh Minh Plastics officially became a joint stock company which would allow it to enjoy a corporate income tax exemption for the years 2004 and 2005 and 50 per cent CIT reduction for the next three years over 2006-2008. Then in July 2007, it listed on Ho Chi Minh City Stock Exchange and enjoyed a CIT reduction for 2006 and 2007, under legal regulations at that time.

Therefore if the company enjoyed both these incentives at the same time, it would be entirely exempted from CIT for 2006 and 2007 and a 50 per cent CIT reduction in 2008. At that time, the General Department of Taxation allowed the company to enjoy both exemptions at the same time.

However, the local tax authority announced that the company would not be allowed to enjoy both incentives at the same time which meant that it would only enjoy a 50 per cent CIT reduction for 2006-2010.

Unexpectedly, the company was asked to pay full CIT in 2009 and 2010 because under local tax authority's announcement in 2011 for joint stock companies and those firms listed on the stock market during the 2004-2008, these companies could choose only one of the two incentives. Therefore, if Binh Minh Plastics enjoyed incentives relevant to a joint stock company, it could not benefit from being listing and should pay full tax for 2009 and 2010.

A lot of other companies face the same situation. Do Huong Duong, deputy director of Phu Nhuan Service JSC said the Ministry of Finance and the Ho Chi Minh City Department of Taxation had also asked the company to pay corporate income tax arrears due to violations in the tax incentives policy for joint stock companies and initial public offering.

"The tax authority should consider how to fairly address these cases because these violations are due to overlapping legal documents, not for tax fraud," said Duong.

Previously, the Viglacera Tu Son Company was also asked to pay fines and 2010 corporate income tax arrears worth VND3 billion (142,857)

The Chuong Duong Drink Company in early September received a demand to pay tax arrears of VND6.9 billion ($328,571) and was fined VND3.27 billion ($155,714).

Eastspring Investments, a foreign investment fund, has also been requested to pay taxes of VND1.7 billion ($80,952) for the 2010 and 2011 fiscal years.