Bogus companies and smuggling - Part 3: Loopholes in business management after licensing

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	Discovery a case of illegal import primitive weapons

Illicit goods were seized by the HCM City Customs Department at Cat Lai port in March 2017. Photo: T.H.

In recent years, Customs officers have detected many cases of smuggling and tax fraud, but when they verified at the registered business address, they found these companies did not operate at the registered address but still had their name at the Department of Planning and Investment of Ho Chi Minh City in active status. As the licensing agency, what does the Department of Planning and Investment think about these cases?

According to information on the national database on business registration, businesses are divided as follows:

Active businesses: Businesses have been granted business registration certificate but have not announced business suspension, not dissolved and have not been revoked the certificate of business registration;

Temporarily suspended businesses: Businesses are in the period of temporary suspension (stipulated in Article 200 of the Law on enterprises) according to the notice of the enterprises;

Dissolved businesses: Businesses complete procedures for dissolving and terminating the operation of the branches or representative offices (Article 201 to Article 206 of the Law on enterprises) and businesses are revoked the certificate of business registration (stipulated in Article 211 of the Law on enterprises).

According to Article 43, the Law on enterprises in 2014, "The headquarters of a business is the contact office of the business in the territory of Vietnam." Within 5 working days from the date of issue of the business registration certificate or the date of changing the registered business contents, the business registration office shall send the business registration information and the relevant contents to the tax office, statistics agencies, labour management agencies, social insurance agencies; and periodically send business registration information and the relevant contents to other competent State management agencies at the same level, the People's Committee of the district, city or province where the head office of the enterprise is located for State management in accordance with provisions of the Law.

Accordingly, when enterprises are granted the certificate of business registration but they have not announced the business suspension or dissolution and they have not been revoked the certificate of business registration, they still in the state of enterprise on the national database managed by the Ministry of Planning and Investment as "active business". In order to change the status of a business as “suspended business" or "dissolved business" on the national database on business registration, enterprises must submit the registration of business suspension or dissolution under provisions in the Law on Enterprises; or "enterprises have been revoked the certificate of business registration" under the provisions of Article 211 of the Law on Enterprises.

In the case where people use the identity card of another person to establish a business. Therefore, how can State agencies check the personal identity of the legal representatives when they establish enterprises?

Enterprises are granted the certificate of business registration when they are qualified under the provisions of Clause 1, Article 28 of the Law on Enterprises with papers and documents prescribed in the Law on Enterprises. However, the Law on Enterprises and the guiding documents do not stipulate that the State registration agencies must check the legal representative upon establishment of enterprises.

Regarding the use of lost identity cards to register the establishment of enterprises, the Department of Planning and Investment has requested the Police to conclude the fake registration dossier as a basis for revoking the business registration certificate stipulated in Clause 3, Article 62 and Clause 1, Article 63 of Government Decree No. 78/2015 / ND-CP of 14^th September 2015 on business registration.

Please tell us about the post-licensing inspections of the Department of Planning and Investment of Ho Chi Minh City?

Since the Law on Enterprises in 1999 took effect, the State management of enterprises has been changed from "pre-clearance audits" to "post-clearance audits". For example, the Department of Industry and Trade and the People's Committee of districts conduct State management of enterprises' activities in the field of industry (production, trade and market management). The Department of Health and the People's Committee of the district control the operation of enterprises in the health sector (medical examination and treatment, wholesale and retail pharmacy, food hygiene and safety). The tax administration agencies (tax offices and Customs offices) conduct State management on enterprises on tax administration in accordance with the Law on Tax Administration.

In order to control businesses, the People's Committee of Ho Chi Minh City issued Decision No. 33/2016 / QD-UBND of 6^th September 2016 on the regulations on coordination among competent agencies as a basis for the coordination between State management agencies in the control of enterprises and households after registration of establishment.

Many enterprises when having a tax debt will set up a new business and change the owner for tax evasion. In order to effectively prevent this situation, what have the Department of Planning and Investment of Ho Chi Minh City done?

The Business Registration Office of the Department of Planning and Investment shall conduct registration for enterprises when they meet all the conditions stipulated in the Law on Enterprises and the Business Registration Office may not require enterprises to submit additional dossiers or papers. Because the Law on Enterprises and the guiding documents do not stipulate that enterprises which have outstanding tax debts can not set up a new business. Therefore, the Department of Planning and Investment can not refuse to settle the registration procedures for enterprises with tax debts.

Bogus companies and smuggling - Part 1: Escaping when being detected VCN- Establishing many companies and conducting Customs clearance of goods as usual, but when bogus companies were ...

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