VietNamNet Bridge - The Ministry of Finance has said it would recommend that businesses found to be evading taxes by repeated declaration of losses have their licenses revoked.

It has also announced that it would expand this year the scale of checking and verifying tax declarations made by businesses. Towards this, it would take the new step of directly guiding local tax departments and setting targets for them.

The decision was prompted by the fact that many firms had declared increasing losses for many years even as they continued to expand their business, the ministry said.

So far this year, the ministry has checked and verified the tax declaration of 3,400 businesses who cumulatively declared losses of VND4 trillion (US$190 million).

It has asked local tax departments to use at least 25 per cent of their staff to inspect tax declarations. If required, they can also mobilise staff from other departments, the ministry has directed.

It has said that selection of the business sample to be inspected will be based on the risk management principles, which in turn are based directly on businesses’ trade index.

The inspection focus would be on companies with “big investment and big loss” declarations, the ministry said.

City and provincial administrations have been told to ask FDI enterprises to submit their financial reports to tax authorities in accordance with the Ministry of Finance’s Decision 15/2006/QD-BTC on March 20, 2006.

Local finance departments should work with the departments of planning and investment, management boards of industrial and export processing zones as well as hi-tech parks to urge FDI businesses to submit their reports on time to the appropriate agencies.

FDI businesses whose investment certificates have been issued by city and provincial people’s committees or management boards of industrial parks, export processing zones, hi-tech parks and special economic zones will have to submit their financial reports to the finance departments of localities where their head office has been registered.

For FDI businesses whose investment certificates were issued by authorised ministries or other agencies under the central Government, the financial reports must be sent to the Business Finance Department and the Ministry of Finance.

The deadline for submitting reports to authorised agencies is March 31.

The department will collect and analyse the financial reports of FDI businesses and submit them to the Ministry of Finance before April 30 for final analysis.

Financial inspections this year were expected to increase state budget revenues by between VND4 – 5 trillion ($190 – 238 million), a tax department official said.

The number of Foreign Direct Investment (FDI) businesses that have declared losses will be released by the end of this month. It is expected that this will drop to less than 30 per cent of the total number of FDI firms this year.

Source: VNS