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Ho Chi Minh City Tax Department assists enterprises in tax finalization. Photo: T.H

Retrospective collection, reducing losses by thousands of billion

In 2018, Ho Chi Minh City Department of Taxation conducted a specialized inspection of 84 enterprises with associated transactions. Through inspection, the HCM City Department of Taxation initially adjusted to increase the taxable income of enterprises by 9,185 billion dong; collection and penalty of VND 341 billion; reduce loss by 261 billion and reduce deducting 7.3 billion. In particular, the results of inspection and examination revealed that some enterprises have a large amount of tax arrears such as 3M Company Limited, from which was retrieved VND 84.9 billion; Panasonic AVC Vietnam Company collected VND 59 billion; Quang Viet Co., Ltd., collected VND 30 billion; Eland Vietnam Co., Ltd., collected VND 21.7 billion ...

In fact, there are many FDI enterprises declaring losses, many of which have suffered losses for many years, even with accumulated losses up to negative equity, but still continue to operate normally, including business expansion. According to the report of VCCI, each year, about 40-50% of FDI enterprises declare and report losses. Sometimes, some localities attract many FDI enterprises such as: TP. Ho Chi Minh, Binh Duong ..., with a proportion of FDI enterprises declaring huge losses, in which many enterprises declare losses for many years.

According to economic experts, fighting against transfer of price has been complicated; struggling with large enterprises is much more difficult and complicated. It is not difficult to understand because large enterprises always have strong financial and human resources. They have a team of experts who are extremely knowledgeable about accounting, finance, tax and law to cover the management agencies, especially the local tax authorities ... This is a major challenge for Tax agencies, because it is also difficult to detect all cases of tax transfer or fraud.

Need effective tools

According to Ho Chi Minh City Department of Taxation, since 2017, raising the price-related regulations in the related transactions from the Circular to Decree (Decree 20/2017 / ND-CP), and recently the provisions in the draft Law on Tax Administration (amended), shows that the Government of Vietnam is very interested in the compliance of not only foreign investors but also domestic enterprises; when there is an associated transaction subject with the same management and price calculation, it must be based on market prices.

Mrs. Nguyen Thi Cuc, Chairman of Vietnam Tax Consulting Association, said that anti-transfer of price is legalized to help tax administration agencies have enough powerful tools to handle enterprises deliberately evading taxes through transfer pricing. According to Cuc, many contents relating to anti-transfer pricing in the draft Basic Law have met the requirements.

With the existing tools, in 2019, Ho Chi Minh City Department of Taxation will continue to inspect and check enterprises with associated transactions that account for a large proportion, FDI enterprises that have incurred losses for many years that still invest in expanding business production, organizations and individuals having suspicious transactions ... Besides, the inspection plan, financial inspection in 2019, Ho Chi Minh City Tax Department will also focus on enterprises and financial and banking institutions; Foreign invested enterprises showing signs of price transfer ...

Ho Chi Minh City Customs actively supports businesses VCN- Implementing the Government Resolution 02 of 2019 on continuing to perform the main tasks and solutions ...

From an enterprise perspective, Mr. Le Hoang Chau, Chairman of HCMC Real Estate Association, said that the Decree 20/2017 / ND-CP dated February 24, 2017 of the Government regulates tax management for enterprises. The business with an associated transaction which has been in effect for nearly 2 years has created business equality among businesses. In which, Clause 3, Article 8 stipulates that "Total interest expense arising in the taxpayers' period is deducted when determining income subject to enterprise income tax does not exceed 20% of total net profit from operation, business activities plus interest expenses, depreciation expenses in the taxpayers' period ".

According to Mr. Chau, this regulation aims to increase the transparency of associated transactions, encourage businesses to exploit many other sources of capital besides bank credit, improve the efficiency of capital use. This is an effective tool to manage the transfer pricing phenomenon that can occur at multinational economic corporations and associated businesses, causing budget losses. But this regulation also has an impact on both domestic enterprises, including real estate enterprises operating under the "mother-child" model, multi-sectoral, with many businesses linked.