The trend of companies in HCM City making
losses continues, with three-quarters losing in the first quarter, and
government policies to support them are not proving very effective.
At a
meeting held earlier this week to review tax collection and gather opinions for
amending the Law on Tax Management, the Tax Department said only 25.5 per cent
of companies were profitable in the first quarter.
Nguyen
Trong Hanh, deputy head of the department, said with the number of loss-making
businesses increasing, tax revenues were going down despite the introduction of
many policies to help the corporate sector.
More
than 40 per cent of companies had made profits in 2009, but it has been
downhill since, with the number falling by nearly 2 per cent in 2010 and a
further 5 per cent last year.
National
Assembly deputies representing the city wanted to know at the meeting why the
Government's policies have not reversed this trend.
Business
representatives told them the main reasons were the high inflation and their
inability to get bank loans at moderate interest rates.
The
deputy head of the State Bank of Viet Nam's HCM City office admitted that the
measures to help businesses access credit only focused on enlarging the number
of categories of eligible borrowers and not on loosening credit.
"Deferring
and reducing income tax payment, one more measure announced by the Government,
does not make a significant difference to businesses' fortunes since many do
not even have to pay tax because they make losses," the business
representatives said.
They
wanted the Government to instead introduce stimulus policies such as subsidies
for their promotional sales and loans for workers to buy houses.
Tax revenues drop
Another
reason for the drop in tax revenues, a deputy head of the HCM City Customs
Office said, was that many companies were just not paying their taxes.
More
than VND1.42 trillion (US$67.6 million) in back taxes were due by the end of
last year.
The
number of companies that pay value-added tax decreased from 28 per cent in 2009
to 19 per cent in the first quarter.
He also
blamed the poor co-ordination between relevant bodies and inappropriate
regulations for claiming taxes for the high rate of back taxes.
For
instance, failure to pay taxes in time only attract a fine of 18 per cent. With
getting bank loans becoming very hard, many enterprises choose not to pay their
taxes.
The
fall in sales, as seen from businesses' low revenues and increasing
inventories, has also caused a decline in value-added and income tax
collections, according to Hanh.
Hanh
pointed to transfer-pricing and tax frauds and ineffective Government oversight
as other reasons for the fall in tax collection.
He said
any amendments made to the tax law should make control over transfer-pricing
more effective.
He also
called for introduction of policies that encourage businesses to pay taxes and
help them obtain loans.
The NA
deputies met with officials from the central bank's HCM City office and tax and
customs offices to solicit suggestions ahead of the upcoming NA session.
VNA
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