Holes in net as state fishes for tax boost

According to the State Audit of Vietnam (SAV) report in 2009, the audit results of 183 of 242 enterprises under 20 state corporations showed adjusted pre-tax profit of VND805 billion ($38 million) and additional tax collection to the state budget of VND536 billion ($25.9 million), equivalent to the total budget collection of several small provinces.

Currently, state-owned enterprises (SOEs) make up only 7,500 of Vietnam’s 500,000 enterprises, but they contribute the most tax.

According to a recent report of Ministry of Finance (MoF), in the first six month of this year, the state collected a further VND1.2 trillion ($59 million) after investigations into enterprises’ tax violations.

Nguyen Thi Cuc, chairwoman of Vietnam Tax Consultants’ Association (VTCA) said only 10 per cent of enterprises had been audited. “[Even with] only a small number of enterprises audited , tax losses were reported hundreds of billion of dong,” said Cuc.

Cuc then asked how much extra tax could be collected if 50 per cent or more of the half a million enterprises in existence are audited.

Dang Van Thanh, chairman of Vietnamese Association of Accountants and Auditors, said uncovering tax frauds was difficult because people were using sophisticated skills to employ a wide range of tactics to avoid paying tax.

Cuc said the situation also stemmed from complicated tax policies and management in Vietnam. “Auditing manpower has been weak. In addition, complicated and overlapping tax regulations have been the main complications for tax auditing,” said the VCTA chairwoman.

Vietnam’s tax law system includes 10 laws and resolutions as well as thousands of circulars and documents to guide the implementation of laws.

A SAV representative said the number of SAV auditors was very small given the current need to audit a large number of enterprises.

He said SAV would focus on high-risk enterprises in future including enterprises with a big contribution to the state budget, or operating on a large and diversified scale.

Currently, taxes and fees account for 95 per cent of the total collection of the state budget. The average growth rate in the budget collection from 2006 to 2010 was 16.5 per cent. Collection from SOEs grew 22.6 per cent in the same period.