Vietnam - FIEs ran away, leaving multi-billion dong debts

VietNamNet Bridge – The General Department of Customs (GDC) has released the warning that foreign invested enterprises (FIEs) have been making the corrupt use of the loopholes in the laws to refuse to pay tax debts and run away.

Diing Long Vietnam, located in the southern province of Binh Duong, still has not paid the tax sum of 17 billion dong and owes 100 billion dong to banks. However, the project investor has left Vietnam.

Not only taxation bodies and customs agencies have been trying to chase for the investor to ask to pay debts, but commercial banks also feed worried stiff because of the big debts. The total value of the assets left by the investor after leaving Vietnam, now mortgaged for the loans at banks, is modest which is not enough to pay bank debts. It is estimated that if the banks sell the mortgaged assets by order of the court, they would get 30-35 billion dong only.

GDC, when citing the case of Diing Long Vietnam, pointed out that the open regulations of the Import-Export Tax Law and the Tax Management Law have been exploited to evade tax.

During the period when FIEs enjoy the tax exemption or the grade period, a lot of FIEs try to import goods in big quantities. After that, they stop operation spontaneously, while the business owners quietly leave Vietnam. As a result, customs agencies cannot collect the tax arrears from the enterprise.

GDC, in a document released on April 2, 2012, released such a warning, while requesting local customs agencies to check the tax payment of enterprises and find out the businesses which have escaped or stopped operation. Local agencies must to send reports about the issue prior to April 6, 2012.

Failing to submit report as requested, because the HCM City Customs Agency only received the request on April 5 afternoon, but Deputy Director of the HCM City Customs Agency Nguyen Huu Nghiep has promised to carry out an intensive checking to find the enterprises which still have not paid tax.

However, one could be able to find the names of FIEs which still have not paid tax on the website of the HCM City Taxation Department. A lot of the enterprises have not paid import, export tax, and other kinds of tax. Meanwhile, the owners of many enterprises have run away.

DAE A Vina, for example, still has not paid the tax of 1.8 million dong, while the business owner has escaped. Vina Kore Furniture is also in the same situation. Meanwhile, Najin Vietnam owes 1.8 billion dong in tax, and Nextier Technology has not paid the tax sum of 3.8 billion dong.

The Thai Binh provincial Board of Management for Industrial Zones has recently asked for the help from the Ministry of Planning and Investment to deal with the Taiwanese Tan Dai Viet Company’s case. The investor has run away, leaving the unpaid tax of 2.75 million dong.

After an ineffective operation period, the company stopped operation and followed the procedures to get dissolved. However, the investor had run away before the procedures were completed. As a result, Vietnamese taxation agencies cannot collect tax, while local authorities do not have the foundation to release the decision to stop the operation of the project and revoke the investment license.

“We had to report the case to the Ministry of Planning and Investment and ask for the instructions how to deal with the case,” said Vu Duy Dinh, Deputy Head of the Thai Binh provincial Board of Management for Industrial Zones.

Diing Long or Tan Dai Viet are not alone. A lot of FIEs have been found as leaving the registered addresses, including the Vietnam-Russia Joint Venture in Binh Thuan province, MTV Hyundai RNC Vietnam in Hanoi or DM Lee Company in Long An province. In late February 2012, the provincial authorities decided to revoke the licenses granted before to six projects, including the one registered by DM Lee.

Pham Huyen

Business & Investment Opportunities 
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