The General Department of Taxation has asked localities to increase inspections at FDI firms that suddenly incur losses after the periods they have received incentives expire.

Businesses that have affiliated and associated transactions with high tax risks will also be inspected.

For example, firms that are listed as incurring multiple losses but still expand businesses, firms that suddenly incur losses after incentive periods, or have huge or frequent transactions with affiliates in countries with low taxes.

The General Department of Taxation also ordered to inspect firms that issue suspicious loss declarations and focus on electronic components assembling, textile and garment, footwear, manufacturing and metal manufacturing industries.

The local departments of taxation were asked to update information about the companies in their areas and build a database for management.

In order to prevent transfer pricing, the Ministry of Finance proposed to tighten control over the ratio of debt to equity. According to the ministry, many firms make loans that are five times higher than the equity, posing risks to the financial security and state budget loss.

Many firms in real estate, finance and service industries reported losses while their revenues increase year on year.

According to the ministry, losses were mainly caused because of huge financial charges, especially loan rates the firms have to pay mother companies overseas. Some firms have to pay trillions of VND each year.

dtinews