Ghost companies haunt revenue collection in Laos
Ghost companies haunt revenue collection in Laos
Ghost companies and enterprises failing to pay taxes to the government were among the major causes of the revenue shortfall in Laos over the past years, according to a top financial official.
Minister of Finance Dr Lien Thikeo told Vientiane Times recently that about 90,000 business units are reported in Laos as sources for the national budget.
“In the first six months of this year, we have set up a team to work in cooperation with local authorities to re-inspect the sources of revenue, aiming to identify whether those business units are still in operation,” he said.
“As a result of our survey, we found that there are an enormous number of ‘ghost companies.' In Vientiane alone, over 2,000 ghost companies were reported.”
Among those, 60 companies were the major ones that have disappeared.
The minister said that, in fact, companies need to inform the authorities and pay all their obligations to the government before they stopped doing business.
But instead, many companies simply stop trading whenever they feel like it, which makes it hard for the authorities to identify the sources of revenue.
In addition, many companies did not have bank accounts and other companies reported to the government that they incurred losses from their business operation so they didn't have to pay profit tax to the government.
The Ministry of Finance is committed to investigate this issue to identify whether their reports are factual.
Dr Lien also touched upon the issue regarding companies failing to pay taxes to the government, which is another factor leading to the shortfall in revenue over the past couple of years.
The minister said it was a shame that major companies did not pay taxes to the government and that he would ask Lao media to help report companies that have failed to pay taxes to the government in the future.
The government recently suspended the operation of 91 enterprises for failing to pay taxes after warning them this would be the outcome.
The suspension aimed to force the companies to recognise their obligations and responsibilities to pay tax to the government as part of their socio-economic development contribution.
In the past six months of the fiscal year, the government was able to collect 13,000 billion kip. It means that it has to collect 17,000 billion kip in the last six months of the year to meet the needs of state expenditure as approved by the National Assembly.
However the minister noted that the revenue shortfall is also related to the drop in the price of mineral commodities on the world market.
Mining is one of the main sources of Lao revenue, followed by taxes collected from construction companies and other business enterprises.
Currently there is not a major source to replace the loss as result of the falling prices of mineral commodities.
Hydropower will play a significant role in the country's revenue in the next four or five years after a number of mega hydropower projects are completed.
