State-owned enterprises ‘need scrutiny’

Experts have raised concerns over Government capital control at State-owned enterprises (SOEs), since only 12 per cent of the country’s SOEs were audited in the period from 2007-09.

Dinh Trong Hanh, head of the State’s Auditing Regulations and Quality Control Department, said the modest number of audited businesses had not reflected the realities of tax law implementation at the SOEs.

“We should have an adequate awareness of the role of tax auditing in SOEs, clarifying targets for work and strictly implementing them,” Hanh said.

He added that the limit was due to the fact that targets of auditing at SOEs had not been clearly defined. Thus, State auditing had focused on obedience to the law and relating regulations.

“The main purpose of the work was to increase the effectiveness of SOEs. In addition, the scale of tax auditing at the enterprises was too small to provide an overview of the situation.”

Figures from the Viet Nam Tax Consultants Association (VTCA) showed that taxes and fees accounted for over 95 per cent of the State budget. The average growth rate of State budget collection in the period of 2006-10 was 16.5 per cent.

SOEs accounted for 23 per cent of that total, which fulfilled their role in the business sector and contributed to the State budget, comprising 7,500 of the country’s 500,000 businesses.

Hanh said the State auditing agency lacked a unified system, and co-operation between the tax sector and businesses had been limited.

State Audit Viet Nam (SAV) Deputy Chief Le Hoang Quan said the average rate of businesses’ violations in implementing their tax duties was 10 to 15 per cent, slightly reduced from earlier periods.

He said violations had been found in all of the audited enterprises, which did not declare the correct amount of taxable funds.

“The violations were the fault of both businesses and the lack of effective management policies.”

He said some tax policies had not yet caught up with business development. Viet Nam has issued 10 laws on taxes and tax management that include multiple decrees and circulars, making it difficult for tax officers to get a good hold on the laws.

Reasons

VTCA’s chairwoman Nguyen Thi Cuc agreed that there were several reasons for the situation, but most of the confusion was due to the overlap between the General Department of Tax and SAV, adding that a business could be audited by both offices.

Cuc said the tax department had experienced a loss of tax revenue from SOEs and other businesses. In 2009 alone, SAV collected more VND536 billion (US$26.1 million) in tax owed from previous years by183 audited businesses.

She said auditing agencies should co-operate in order to help enterprises save time and money.

Meanwhile, the Finance Ministry has completed a financial supervision mechanism for SOEs and will begin applying it this quarter to effectively manage capital at the businesses.

A representative from the ministry said this mechanism was necessary to manage capital, as SOEs hold 70 per cent of the country’s fixed assets, 20 per cent of its social investments, 60 per cent of bank credits and 70 per cent of official development assistance capital.

The mechanism includes lists of investment projects, ways to mobilise capital, debt management and business results for SOEs, as well as those where State capital dominated.

Twenty-two State groups and corporations will be implicated by the mechanism, including Electricity of Viet Nam, Viet Nam Coal and Minerals Group, Viet Nam National Petroleum Group, Viet Nam Post and Telecommunications and Vietnam Airlines. — VNS

Tags: Vietnam companies, Vietnam enterprises, Vietnam SOEs