MoF ready for heart-to-heart tax talks

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Nearly 100 enterprises across Vietnam will receive visits from tax inspection teams after deputy minister of Finance (MoF) Do Hoang Anh Tuan gave the plans the go ahead recently.

“The MoF’s inspection aims to check the enterprises’ implementation of tax obligation to collect tax arrears and discover transfer pricing cases,” Tuan told VIR.

He added that the inspections were expected to finish late this year.

The final list of 82 enterprises includes 21 in Ho Chi Minh City, 19 in Hanoi, 15 in Dong Nai province and smaller numbers in other cities and provinces.

Many foreign-invested enterprises (FIEs) can also expect a visit in 2011 too, including such big names as Metro Cash & Carry, Big C and AAA Pharmaceutical.

Other big firms to see inspections include Nguyen Kim Commercial Company, T&T Group, Red River Corporation, Kinh Do Real Estate Joint Stock Company and Dream Vina Limited Company.

The 82 enterprises were chosen from a 90-name list comprising firms across the country which the MoF completed financial inspections in 2007, 2008, and 2009.

Those inspections showed most large-scale companies on the list reporting losses ranging from hundreds of thousands to millions of dollars. The enterprises in question were operating in a diverse range of sectors including goods distribution, supermarkets, transportation, construction, healthcare, gas, fertiliser and foods.

 “The list of 82 chosen enterprises includes enterprises which reported losses for three consecutive years and others which reported profits but not equivalent with their business scale,” said Tuan.

The MoF’s earlier financial inspection of those 90 enterprises found that only three of the 21 enterprises in Ho Chi Minh City declared a profit.

Most of the remaining enterprises reported a cumulative loss of anywhere from VND150 to 179 billion ($7.2-$8.6 million) during the period in question.

In Hanoi, the situation was similar with jus two of 19 enterprises showing a profit over the three years.

Inspection results in Dong Nai and Binh Duong provinces showed all 25 firms declared a loss, with FIEs posting the biggest losses.

Some FIEs reported a total loss of nearly VND600 billion ($29 million) for three consecutive years.

Meanwhile, inspections carried out in Can Tho, Danang and Binh Thuan revealed a similar story.

The inspection was conducted by the MoF after many experts expressed concern about the “fake loss, real profit” situation of many FIEs.

In 2010, after the MoF’s inspection of 4,000 FIEs, most of these enterprises reported losses of up to VND3,500 billion ($169 million). 

MoF Minister Vu Van Ninh agreed that the ministry had discovered many transfer pricing cases where FIE enterprises had raised the prices of materials bought from their parent companies abroad.

However, an MoF official stressed the current round of tax inspections were a regular part of the ministry’s work and that inclusion of a company in the inspection list was not necessary an indicator of wrongdoing.

“However, if the MoF discovers any tax law violations, we will address the issue seriously to ensure fairness for all enterprises operating in Vietnam,” said the official.