The Ministry of Finance has set a requirement for the Tax Department to conduct inspections and audits of at least 18% of the businesses under its tax management in 2016. The target is to increase revenue through inspections and audits by over 13.000 billion VND, and to contribute over 10.000 billion VND to the state budget.
Specifically, the tax authorities will focus on inspecting and auditing businesses with high risk indicators, businesses with large VAT refund applications, businesses involved in transfer pricing, and businesses operating in the e-commerce sector, etc.
By the end of the first quarter of 2016, the entire tax sector had conducted inspections and audits of 6.510 businesses, achieving 7,26% of the 2016 inspection plan (the plan was 89.650 businesses). Accordingly, the total amount of tax revenue increased through inspections and audits reached VND 1.629 billion, equivalent to 98,1% compared to the same period in 2015. This included VND 893,18 billion in back taxes, VND 167,85 billion in refunds, and VND 548,92 billion in penalties. In addition, the amount of tax adjusted upwards through inspections at tax offices was VND 19,37 billion, losses were reduced by nearly VND 3 trillion, and deductions were reduced by nearly VND 150 billion.
Previously, in response to the press, Nguyen Van Phung, Director of the Department of Large Enterprise Tax Management under the General Department of Taxation, stated that the tax sector is currently implementing measures to prevent tax evasion; focusing on preventing cases where investors take advantage of preferential tax policies such as a 10% tax rate for 15 years, tax exemption for 4 years, tax reduction for the following 9 years, etc., and then dissolve or withdraw their investment capital after the preferential period expires.
In fact, there are many questions surrounding two foreign-invested retail businesses in Vietnam, Metro and BigC, which, after a period of operation in Vietnam, continuously claimed losses to evade tax obligations. However, according to Mr. Nguyen Van Phung, the issue needs clarification because foreign-invested businesses operating in Vietnam have two parts: firstly, the business itself is a legal entity operating in Vietnam, and secondly, the owner, or the true owner of these businesses.
For retail businesses like Metro or BigC, if the business entity itself is incurring losses, those losses can be carried forward to subsequent years. And in response to the question of whether we should collect taxes from businesses that are losing money but whose owners are still making a large profit, Mr. Nguyen Van Phung affirmed: "Of course, we have many measures to collect taxes from these owners. For example, if the owner of Metro sells Metro's facilities in Vietnam and makes a profit, we must collect taxes."
Therefore, according to Mr. Nguyen Van Phung, all activities related to the direct and indirect transfer of capital involving intellectual property, trade, trademarks, and business rights—in cases like Metro or, soon, BigC—will involve business rights, and the tax authorities will still collect taxes even if the business incurs losses.
For the remaining months of 2016, the Tax Department plans to focus its efforts on inspecting 10 large enterprises with the potential to generate significant revenue for the state budget; and continue to inspect transfer pricing enterprises, e-commerce businesses, and enterprises with high risk indicators regarding VAT refunds…
To achieve this goal, especially to prevent transfer pricing, the Tax authorities are focusing on building a database on related-party transactions and profit margins of independently traded enterprises in certain industries and sectors with related-party transactions and transfer pricing. Accordingly, they are conducting functional analysis, value chain analysis of functions, analysis of transactions with related parties, analysis of value chains created by related parties, and financial analysis to identify risk items and components from related-party transactions, thereby issuing inspection decisions at enterprises.
Simultaneously, enhance capacity and supplement resources for inspection and auditing work, such as: Organizing and promptly supplementing human resources for inspection and auditing work to at least 35% of the total number of civil servants in the unit. Implementing training, workshops, and professional exchanges on tax inspection and auditing to improve the capacity and skills of civil servants working in tax inspection and auditing in detecting new methods, tricks, and fraudulent behaviors to ensure they meet the requirements of their assigned tasks. Particular attention should be paid to skills in inspecting and auditing taxpayers operating in the fields of information technology, e-commerce, and transfer pricing; Implementing knowledge and skills assessments for tax inspection and auditing civil servants…
Source: www.baohaiquan.vn
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