VietNamNet Bridge – Many local companies have taken administrative loopholes of the Government's policy on tax incentives to evade taxes, resulting in a huge loss for the State budget.

As stipulated in the Law on Export and Import Tax, companies that produce products for export or import materials for production, have a 275-day grace period for payment of import tax.

However, after the deadline Hiep Binh Company owner fled, leaving a tax debt of up to more than VND5.3 billion (around US$260,000). The customs department reported Hiep Binh Company to police authorities for investigation.

The Ha Noi Customs Department statistics state that as of June 2011, the department managed nearly VND2.4 trillion ($116 million) in tax debts.

In the first six months of this year, the department found that 41 companies took advantage of business tax exemption policies to evade more than $1.1 million in tax.

According to the 2006 Law on export and import taxes, ex-importers enjoy tax incentives aimed to minimise their capital shortages and boost ex-import activities.

Head of the Noi Bai Customs Branch Office Dao Van Lien told Kinh Te Do Thi (Urban Economy) that Hiep Binh Company was only one of many found guilty of tax evasion.

According to Lien, tax evaders usually establish bogus companies for goods import and then when tax payment deadline comes, they disappear.

The Ha Noi Customs Department estimates that tax debt will reach nearly VND3.7 trillion ($180 million) by the end of 2011, accounting for 4 per cent of total State budget revenues this year.

"Effects of tax incentive policies must be reviewed," stressed Lien.

"Administrative loopholes of tax incentives have been taken by many companies. It is very difficult to recover from a debt when companies intend to evade taxation," said Chairwoman of the Tax Consultant Association Nguyen Thi Cuc.

Director of the North Ha Noi Customs Division Pham Tran Thanh said that tax reclamation faced a lot of difficulties due to the prolonged debts, of which many were the result of dissolved, bankrupt, or terminated companies.

Deputy Director of the Ministry of Finance's Tax Policies Department Nguyen Van Phung said that outstanding debts were attributed to the policies, the lack of enterprise awareness and stability, intention of tax evaders and ineffective measures for reclaiming taxes.

"The biggest worry lies in low company awareness of tax regulations," said Phung.

Meanwhile, enforcing tax management law is complicated and difficult to carry out. It is also time-consuming and costly to seize and auction property due to high cost for storage, according to Phung.

The General Customs Department of Viet Nam also asked the Government and the National Assembly for approval to revive the Taxation Management Law that stipulates the importer pays taxes before receiving goods.

The Taxation General Department said the department collected nearly VND250 trillion ($12 billion) of taxes for the State budget in the first six months of 2011, reaching 55.3 per cent of this year's plan.

VietNamNet/Viet Nam News