VietNamNet Bridge – Given the legal loopholes that exist in current tax laws, many have found it easy to circumvent government regulations and decisions by  ministries and agencies.

The HCM City Taxation Agency has released its decisions on collecting what it estimates as VND182 billion in tax arrears from individuals who participated in deals that involved the transfer of shares of Hoan My Medical JSC and Pho 24.

In 2007, six of Pho 24’s shareholders sold their stakes to others but failed to declare the sales and fulfill their tax duties.

In 2011, a shareholder of Hoan My Medical JSC transferred his shares to an institutional investor and also did not pay tax.

The tax evasion has only been discovered recently, when taxation bodies took inspection tours to a series of businesses which have had share transfer transactions in the last few years.

The six individual shareholders have been asked to pay tax arrears of VND16 billion, while the ex-shareholder of Hoan My is deemed to owe VND166.2 billion.

When will the taxation body collect?

In principle, individuals are required to remit back taxes within 10 days of the time they receive collection notices of tax arrears due from taxation bodies. They are, however, entitled to ask for a 90 day extension.

According to Nguyen Thanh Kinh, Head of the Le Nguyen Law Office, if individuals do not pay tax after the 100 day grace period, the appropriate agencies have the right to apply coercive measures to force them to pay up.

However, he doubts if the taxation agency has the power to compel tax arrears payments, especially when an individual is living overseas.

Nguyen Thi Cuc, Chair of the Vietnam Taxation Consultancy Association, says that the Vietnamese government can request the cooperation of countries to which tax cheats have fled, asking them for assistance in collecting the long-overdue debts.

However, Cuc also said such cooperation heavily depends on past and future bilateral agreements signed between the two countries.

Nguyen Thai Son, former Head of the Legal Department of the HCM City Taxation Agency, noted that the sum of VND182 billion is just the tip of the iceberg.

Many stake transfer deals were made in the period between 2007 and now, but the state could not collect tax. Only since the Circular No 111 guiding the implementation of the Personal Income Tax came out in August 2013, have the taxation bodies tightened the control over the capital transfer deals.

The circular stipulates that from July 1, 2013, individuals transferring stakes must report the deals to taxation bodies and pay personal income tax for the income they earn from the stake transfer deals.

Therefore, as explained by a tax officer, those enterprises in which the stakes were held which cannot prove that the individuals fulfilled their tax duties, must declare and pay tax on behalf of the individuals.

However, in the cases of Hoan My and Pho 24, the transactions were made prior to the day the circular took effect. This means that the enterprises do not have the responsibility of paying tax for the former shareholders.

NLD