Bottom falls out of tax collections

More than 1,000 foreign-invested enterprises in Vietnam reported fake losses to evade tax in three years from 2008 to 2010.

According to a General Department of Taxation (GDT) report for the first half of 2011, it treated 107 foreign-invested enterprises (FIEs) as having reported fake losses for three consecutive years from 2008-2010 with tax arrears collection of VND2.23 trillion ($107 million).

As planned this year, the GDT entrusted 63 local departments to inspect 870 FIEs which showed transfer pricing signals or reported losses for three consecutive years (2008, 2009 and 2010). The GDT’s Inspectorate will check 40 FIEs and 82 other units in a supplemented list from the Ministry of Finance across 2011.

The GDT said in the past six months, due to bad impacts from many factors including the earthquake and tsunami in Japan, business activities of enterprises, both state-owned, domestic private and foreign invested, in Vietnam had been affected resulting in a remarkable reduction in the state budget collection.

For example, in January, declared Value Added Tax (VAT) of enterprises in Vietnam was about VND13.8 trillion ($666 million). However, this figure lowered to VND9.2 trillion($444 million) in April and to VND8.6 trillion ($415 million) in June.

Similarly, declared Special Consumption Tax (SCT) was about VND4.3 trillion ($207 million) in January and dropped to VND3.5 trillion ($169 million) in May and VND2.8 trillion ($135 million) in June.

For Personal Income Tax (PIT) collection in January, declared tax was more than VND3.3 trillion ($159 million) and decreased to VND2.8 trillion ($135 million) in May and to VND2.4 trillion ($116 million) in June.

Some other collections from registration fees and land usage also sharply dropped – VIR

Tags: Vietnam taxes