Mystery surrounds many unlisted stock equations

October 16, 2011 | 23:09

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Securities firms are scratching their heads about how to calculate provisions for unlisted stocks. Ho Chi Minh City Securities Corporation’s (HSC) high-profile case to get answers highlights stock firms’ demand for greater leadership from regulators.

During the past four years, HSC asked relevant authorities including Ho Chi Minh City Department of Taxation, Vietnam General Department of Taxation and deputy minister of Finance (MoF) Do Hoang Anh Tuan to prove that the company had paid all taxes and tax authorities should explain the VND19.4 billion ($937,000) paid in tax and VND4.1 billion ($198,000) punishment for delayed tax payments.

HSC said that during 2007-2008, when stock prices fell sharply, the company spent VND16.8 billion ($812,000) for provisions for over-the-counter (OTC) or unlisted stocks in 2007 and VND99.6 billion ($4.8 million) for unlisted stock provisions in 2008.

Ho Chi Minh City Department of Taxation, however, requested HSC to pay an additional corporate tax of VND19.4 billion ($937,000) for 2007 and 2008 and a punishment of VND4.1 billion ($198,000) due to tax payment delays. HSC paid the sums, but demanded relevant tax authorities should fully explain the legal regulations.

HSC said it had applied many legal documents including Circular No 134/2007/TT-BTC, Circular No 13/2006/TT-BTC, Circular No 11/2000/TT-BTC, Decision No 15/2006/QD-BTC, Decision No 45/2007/QD-BTC to calculate provisions for unlisted stocks. Tax authorities said they were right when not accepting HSC’s provisions for unlisted stocks but did not outline which tax policies it had applied in the case.

On November 5, 2010, the head of the MoF’s Tax Policy Department, issued a dispatch to HSC and relevant tax bodies, explaining that it allowed HSC to make provisions according to Circular No 11/2000/TT-BTC that HSC had applied when calculate provisions for unlisted stocks.
On September 7, 2011, the head of the MoF’s Tax Policy Department also issued a dispatch which was opposite to the previous dispatch on November 5, 2010, requesting HSC to make tax payments as required by tax authorities.

“Tax authorities did not accept such provisions for unlisted stocks as logical expenditure,” HSC said. Circular No 228/2009/TT-BTC stated that all securities firms and investment fund management companies would make provisions via specific regulations. But 11 years later, no specific regulations have appeared.