|
False FIE losses reported
The Security Investigation Agency under the Ministry of Public Security has decided to prosecute Equatorial Hotel at No.242 Tran Binh Trong Street in District 5, HCM City for tax evasion. Meanwhile, more than half of foreign-invested enterprises (FIEs) in HCM City have reported losses for consecutive years, but continue to operate and even expand.
The five-star Equatorial Hotel in HCM City is run as a joint-venture between Hoang Viet General Service Company and Hong Kong’s Planergo Company. HCM City Taxation Department found a lot of violations committed by the hotel.
In documents transferred to the investigation agency, the department shows that from 2003 to 2008, Equatorial Hotel did not keep accounting records as required and did not apply Vietnam’s accounting system. The hotel has also been found as “ignoring” its contractor by withholding tax sums of over 6.3 billion dong and declaring a tax lower by 8.5 billion dong than the sum it really had to pay.
After discovering signs of tax evasion, HCM City Taxation Department has decided to transfer the case to the Security Investigation Agency, requesting criminal proceedings against the tax evaders.
According to the HCM City taxation department, tax fraud is not a new phenomenon. In recent years, the taxation agency has warned against absurdities in tax declarations by FIEs.
Agency reports show that in 2008, up to 50 percent of 3500 FIEs reported losses, while the figure was higher in 2009, at 60 percent. Though FIEs continued toi claim losses, many still expanded their business scale.
Nguyen Trong Hanh, Deputy Director of the HCM City Taxation Department, told Saigon tiep thi newspaper that there are many big FIEs, each of which has a turnover of hundreds of billions of dong a year, but they usually report losses to deceive taxation agencies.
“We have warned against tax evasion many times. On a recent inspection tour to some FIEs, including Equatorial Hotel, we found signs of serious tax evasion and we decided to transfer the case to the investigation agency,” Hanh remarked.
According to Hanh, many enterprises are using the so-called “price transfer” in order to bring profit to parent groups of foreign partners. This is also one of the reasons why many FIEs usually report losses.
Equatorial Hotel is the first FIE in HCM City facing criminal prosecution for tax evasion. A tax official stressed that it is the right time to supervise tax payments and punish enterprises that commit fraud. Competent agencies hope that the prosecution of Equatorial Hotel will be a warning against fraud, which may threaten the national economy and Vietnamese laws.
Most recently, when inspecting joint-ventures that reported regular losses in HCM City, the city’s taxation agency paid special attention to Saigon Metropolitan (SM), a joint-venture between Binh Minh Construction Company under the Saigon Construction Corporation and the UK’s Saigon Metropolitan Limited (SML).
Its latest financial report showed that the joint venture increased its chartered capital four times, from $29 million to $49.7 million, but still says it has incurred cumulative loss of nearly $20 million and owes $7 million dong in taxes. Binh Minh Company has agreed to transfer 30 percent of its stakes to SML. With the share transfer, SML is now holding 90 percent of stakes.
Analysts say that they can anticipate what will happen. In many cases, Vietnamese partners only make capital contribution through their land use right. Lacking financial capability, it will be very difficult for Vietnamese partners to struggle with those who plan to take over joint-ventures and turn them into 100 percent foreign-invested enterprises.
vietnamnet, SGTT
|
