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Multicolor picture of Tax debt

16:19 | 14/09/2018

VCN- Over the past time, when the Tax sector has published enterprises having tax debts in the mass media, the picture of tax debt has been specified with difficulties in the real production and business and methods for tax evasion, even the tricks of enterprises and the tax collection of the Tax authorities.

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multicolor picture of tax debt
After being publicized, enterprises have actively implemented tax payment. In the photo: Operational activity at Dong Da Tax Branch.

Many big companies owe tax - the Tax Authorities have no ways to collect tax

Ha Noi Tax Department is one of the units which has the largest tax debt in the country. In the first 8 months, the department has published over 1,000 units owing tax, fees and amounts related to land with total tax debt of 3,960 VND billion. In the published list, there are many big companies owing huge amounts and delaying payment from year to year, and the tax authorities have no ways to recover tax.

Typically, Lung Lo 5 Investment and Development Joint Stock Company owed fee for using land with over VND 342 billion in the Ao Sao- Lexington Estate project (Hoang Mai-Ha Noi). According to Ha Noi Tax Department, the company has owed taxes since 2015 and the Tax authority has taken coercive measures as per regulations such as deducting cash from the company’s account and notifying invalid invoices but the company has not yet paid taxes to the State budget.

Talking with the Customs newspaper’s reporter, Mr. Tran Xuan Nghiem, Deputy General Director of Lung Lo 5 Investment and Development Joint Stock Company said that the cause of the tax debts is that the infrastructure connected to the Ao Sao area has not been implemented according to the plan and the compensation value for land clearance has highly increased. Meanwhile, Ha Noi Tax Department applied high tax rates for the land price in this area, so that the company is facing the risk of loss on this project. Currently, the Company has proposed to the People's Committee of Ha Noi City to recalculate the land price, so that the investor can perform its financial obligations to the State budget and commit to continue arranging income source for tax payment in line with regulations.

The list of tax debtors published by the tax authorities has shown that most of the companies topped in the list are companies owing land use fees for real estate projects. Many companies have been indebted for several years and among them there are projects that are considered by the Tax authorities as recoverable debts, but in fact it is very difficult to collect. Specifically, the project of office, commercial center and housing at 52 Linh Nam invested by Lilama Joint Stock Company with the debt amount of VND 65 billion; The housing project for Hoang Mai police officers invested by Hoang Ha Construction Co. Ltd., with the debt amount of VND 14 billion; The housing project for Hoang Mai district police invested by Hoang Ha Construction Co. Ltd., with VND 140 billion; the housing project for soldiers of Personnel and Organization Department under General Department III- Ministry of Public Security invested by CT Vietnam International JSC with the debt amount of VND117 billion.

According to the Customs Newspaper’s reporter, these enterprises are still operating. However, the projects owing tax are suffering from difficulties in construction leading to the late completion of projects and they cannot be handed over and cannot mobilize capital from customers.

The progress of tax debt collection

The fact has shown that the measure of publicizing the names of tax debt companies has achieved positive results. The publicized companies have actively paid taxes. After being publicized, many companies are fearful of losing their prestige and affecting business, so they have to quickly implement the debt repayment.

For example, the complex project of office, commercial services and housing at 21 Le Van Luong, previously, this project was formerly known as Thanh An Tower of Thanh An Corporation (Army Group 11 - Ministry of Defense) as an investor and was allocated land in 2009. Then Thanh An coordinated with Ba Dinh Construction Consultancy - Investment Joint Stock Company to implement the project.

In July 2016, Thanh An Corporation paid over VND 142 billion of land use fee for the project at 21 Le Van Luong. In June 2018, Thanh Xuan Tax Branch notified the debt of land use fee and late payment of this corporation with the amount of over VND 74.7 billion. After taking many measures to urge for tax payment and implementing tax reduction and late payment for the projects with amount of VND 2.7 billion (under Official Letter No. 21526/TB-CCT-QLN of Thanh Xuan Tax Branch), on 30th July 2018, Thanh An Corporation fulfilled its tax obligations with the state budget of VND 71.9 billion. At present, Thanh An Tower has been renamed as Manhattan Tower at 21 Le Van Luong, developed and distributed by Landmark Holding Joint Stock Company. After fulfilling its tax obligations, this project is being implemented in accordance with the schedule agreed with the customers.

According to the statistics from Ha Noi Tax Department, the publicity of over 1,000 companies owing taxes, in the first 8 months of 2018, 273 enterprises and projects paid over VND 97.3 billion. However, the number of enterprises paying tax is still insignificant compared to the number of enterprises that were publicized. Many Tax officers in charge of tax debt management at Tax Branches in Ha Noi said that there are enterprises that the Department sent invitations to many times for working, but they did not go to the tax office. When the tax officers directly went to the headquarters of these enterprises, these enterprises ran away and were absent. The tax debt collection from these enterprises is the difficult task for the tax authority.

Moreover, the strong measures such as account and invoice enforcement have been implemented for these enterprises. However, the enforcement of tax collection by deducting cash from the enterprises’ accounts at banks is difficult because these enterprises have many accounts but the accounts that they provided to the Tax authorities have a very small balance, so that it cannot enforce to collect from that.

multicolor picture of tax debt Ha Noi: Many big enterprises delay tax debt payment

VCN- Ha Noi Customs Tax Department has publicized the list of 331 enterprises with tax, fees, and land use ...

According to many economists, the tax debt story of many real estate projects is attached to the difficult period of the economy. In order to have capital for real estate projects valued at thousands of VND billion, investors have to mobilize many sources such as customers, banks and their capital… However, when the market is difficult, the enterprises cannot mobilize from their customers, and they have to borrow from banks with interest rates up to 20% per year.

Lawyer Truong Thanh Duc, Chairman of Basico Law Firm, said that with such high interest rates, if these enterprises owed for too long, the pressure from debt repayment will be strong, and they can not continue to borrow to maintain the project. For the penalty for late payment in this period is under 50% compared to the banks’ interest rate. Thereby, enterprises seek ways to extend the deadline for tax payment, as well as deliberately implement the late tax payment, and accept to pay the penalty.

For thousands of reasons, including objective reasons, and enterprises consciously and deliberately avoiding their responsibility to the state budget, the picture of the Tax sector’s tax debt is not only extremely complicated and concern for the Tax sector, but also affects the Vietnam business environment and causes inequalities for other enterprises.

By Bao Minh/ Ngoc Loan