VietNamNet Bridge - Formosa Ha Tinh has received a tax refund worth VND13 trillion, proof that foreign invested enterprises (FIEs) can enjoy high incentives, experts say.

In a report submitted to the Ministry of Finance recently, the General Department of Taxation (GDT) wrote that from 2014 to May 2016, the Ha Tinh provincial Taxation Agency approved a tax refund of VND13.483 trillion. 

The Taiwanese investor also received investment incentives from the government of Vietnam after May 13, 2014, when demonstrations and clashes in some industrial zones in the south caused damages.

Le Du Phong, former rector of the Hanoi Economics University, said the information was a big surprise to him.

“I cannot understand why Formosa can get tax refunds because it has not organized production to get refunds,” he said, commenting that VND13 trillion is even higher than the sum of money Formosa promised to compensate for damages it caused to central coastal provinces.

GDT has proposed to the Prime Minister to terminate supporting measures applied to Formosa prior to September 1, 2016 because Formosa has committed many violations in tax declarations and payment.

“It is unreasonable that an enterprise which discharges hazardous waste to the sea can receive tax refunds and other preferences,” he said.

Noting that the sum of $500 million, or VND11.5 trillion in compensation promised by Formosa is still lower than the amount of tax refund, Luu Bich Ho, former head of the Development Strategy Institute, commented that in this case, Vietnam cannot get benefits in attracting foreign direct investment (FDI).

“The Formosa story is proof showing that foreign invested enterprises receive too many incentives, which puts Vietnamese small and medium enterprises at a disadvantage,” he commented.

He went on to say that Vietnam once tried to attract as much foreign investment as possible by laying down the red carpet to foreign investors.

Ho believes that in the new period of FDI attraction, there is no need to offer incentives to foreign investors, except the ones which use high technologies, to ensure a fair playing field for foreign and Vietnamese enterprises.

In the latest move, GDT has proposed to the Prime Minister to terminate supporting measures applied to Formosa prior to September 1, 2016 because Formosa has committed many violations in tax declarations and payment.

Phong said that stopping support for Formosa should be done immediately to show Vietnam’s view about the investor’s violations.

Prior to that, MONRE also cited 53 violations committed by Formosa. The most serious violation was the use of coke wet quenching technology instead of dry quenching, thus harming the environment.

Dat Viet