Mai Linh tax request a bad precedent?

Mai Linh's request for exemption from tax interest and late payment fees is more than difficult to meet

Tran Dinh Lieu, deputy general director of Vietnam Social Security (VSS), told Vneconomy that Vietnam Social Security can not meet Mai Linh’s requirements because the proposal itself is not legal. VSS will forward the request to the government and relevant agencies for consideration.

“We are still working with relevant authorities and are preparing documents to submit to the government, however, at this point it is impossible to say whether Mai Linh’s request will be met,” Lieu stated.

Meanwhile, numerous experts claimed that it would be difficult to approve the request. According to experts, every year, Vietnam sees thousands of enterprises go bankrupt or suspend operations or simply struggle to remain on the surface. Thus rescuing Mai Linh would set a bad precedent.

Besides, according to Circular No.156/2013/TT-BTC dated November 6, 2013 of the Ministry of Finance providing guidance on some articles of the Law on Tax Administration, the Law on the Amendments to the Law on Tax Administration, and Government Decree No.83/2013/ND-CP, enterprises are permitted to apply for an extension of the tax payment deadline in case they either suffered massive material damages from natural disasters, fire or accident, impacting their manufacturing activities or have to suspend their operations due to relocation ordered by authorities.

Previously, Mai Linh sent a document to the National Assembly Committee for Social Affairs, the Ministry of Finance (MoF), and VSS to report that as of the end October 2017, Mai Linh Group’s accumulated outstanding debts of social insurance, health insurance, and unemployment insurance were over VND182 billion (around $8 million), including VND105 billion ($4.6 million) of original debts and VND77 billion ($3.4 million) of interest.

However, the company, along with others, is facing fierce and unfair competition from Uber and Grab. In particular, there are many different business conditions applicable to traditional taxi firms that Uber and Grab are exempt from. This lopsided competition has significantly affected the company’s plans and operations.

Mai Linh’s revenue has declined by 30 per cent from the years before the entrance of Uber and Grab.

Thus, Mai Linh requested the National Assembly Committee for Social Affairs, MoF, and VSS to cancel the interest and the penalty on its social insurance debts, the late payment fees, while simultaneously extend the deadline for its original debt payment and permit Mai Linh to pay the original debt within 20 months of 2018, with VND6 billion ($264,251) per year.

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