Foreign-invested enterprises receive too many tax incentives: survey

Foreign-invested enterprises receive too many tax incentives: survey

Recent surveys about the tax policies applied to foreign-invested enterprises (FIEs) show that Vietnamese have become choosier about foreign direct investment (FDI) and FIEs (foreign-invested enterprises).

“Do you think that the FIEs in Vietnam are transparent in tax payments?” was one survey question raised by Thoi Bao Kinh Te Vietnam. Eighty-seven percent of the 7,500 readers said no.

At least 6,300 out of the 6,900 readers replying to the question about the fairness in tax policies said they did not think the policies were unfair to different taxpayers.

When asked if they think the State should adjust the corporate income tax incentive policies so as to fix the loopholes in the legal framework and prevent tax evasion, 89 percent of the 7,100 replies said it was necessary.

Analysts noted that taxation bodies are making significant efforts to create favorable conditions for taxpayers to fulfill their duties and create a more even-handed environment for taxpayers.

They also said that FIEs have more “consciously abided by the tax duties”.

A report by the HCM City Taxation Agency recently showed that the total corporate income tax paid by enterprises in the city in the first eight months of 2014 reached VND26.7 trillion. of that month, the taxes paid by FIEs increased most sharply, 22 percent over the same period last year.

Some of the FIEs were named as “big taxpayers” who had paid far higher sums than before Unilever Vietnam, for example, paid VND1.132 trillion in the first eight months of the year, up by 78 percent in comparison with the same period last year.

Phu My Hung, a real estate developer, paid VND718 billion, a 15-fold increase, while Pouyuen Vietnam paid VND200 billion, up 157 percent.

Two years ago, government inspectors, who made inspection tours to FIEs in Hanoi, HCM City, Binh Duong and Dong Nai provinces discovered many problems in the enterprises’ execution of tax policies.

The biggest problem was that many FIEs declared big losses, though they still continued to expand their business, thus raising doubts about FIEs’ transfer pricing.

By the end of 2011, the inspectors had found 125 out of 399 inspected enterprises in export processing zones declaring losses from 2009-2011.

Of these, 36 enterprises were found declaring a gross three-year loss of over VND2.8 trillion in total, while the other 69 enterprises reported a two-year loss of VND1.829 trillion.

In an email to VietNamNet, Nguyen Xuan Nguyen, a factory worker, said that he had heard of complaints about the overly high investment incentives given to foreigners and the big losses incurred by FIEs.

Nguyen said there should be tighter control over the FIEs, and that sanctions should be applied to the FIEs that evade tax and conduct transfer pricing.

Nguyen cited a report from NCIF, a socio-economic information and forecasting center, as saying that the government offered too many tax incentives to FIEs, while the benefits Vietnam received from enterprises was modest. He called on government agencies to become choosier when licensing foreign-invested projects.

vietnamnet