Machinery worth 100 billion, business declares 200 billion when imported

Tax authorities have built a database on the finances and business of 12,000 FDI enterprises, but it is not easy to identify transfer pricing enterprises, even those in doubt.

Among the 5 tasks that the Ministry of Finance was assigned but has not completed, mentioned by the Prime Minister's Working Group in the working session on the morning of August 26,The drafting and development of the Decree on anti-transfer pricing and tax evasion has been delayed by nearly 2 months compared to the deadline of June 30.

Explaining the reason for the delay, a representative of the Ministry of Finance said that due to the complexity of the content related to the issue of transfer pricing of enterprises, especially enterprises with foreign investment capital (FDI), the Ministry of Finance has requested to postpone the deadline for submitting the draft to the Government until the end of November.

Referring to the issue of transfer pricing, Finance Minister Dinh Tien Dung shared that this is an extremely complicated job, when "cThe "tricks" to cheat are very sophisticated. Enterprises transfer prices not only in the production stage but also right from the investment and equipment import stage.

The Minister of Finance said that the fight against and identification of transfer pricing enterprises is extremely difficult. Photo: Nhat Bac

He cited an example: the imported equipment cost 100 billion VND, the enterprise declared it as 200 billion, then depreciated all 200 billion VND to transfer pricing. Then, in the production and business process, raising input prices, lowering output prices, buying expensively but selling cheaply... is also transfer pricing.

"CTransfer pricing is not only the responsibility of the financial sector, but also the responsibility of other sectors, such as planning and investment, because it is related to investment licensing," said the Minister of Finance.

In addition, Deputy Minister Do Hoang Anh Tuan said thatThe General Department of Taxation has also built a database on finance and business of 12,000 FDI enterprises divided by industry. However, trealityAnti-transfer pricing is especially important in manufacturing enterprises that import components from foreign countries. If imported from G7 countries, it is very easy, but if imported from other countries such as China (for example, the case of Formosa), it is very difficult to coordinate.

The phenomenon of transfer pricing by enterprises is increasingly complicated. According to the Ministry of Finance, by the end of December 2015, this agency had inspected and examined 2,421 enterprises with signs of and reduced losses of over 4,400 billion VND, refunded and fined over 500 billion VND. More than 1,600 case files with signs of tax law violations, signs of tax evasion, signs of appropriation of tax refunds... were also transferred by the Ministry of Finance to the investigation agency.

A typical example in tax collection and anti-transfer pricing is the case of Metro Vietnam. In April 2015, after 12 years of doing business in Vietnam but always reporting losses,"Big guy" Metro has beentax authorities have collectedmore than 507 billion VND in taxes,including loss reduction money, corporate income tax collection, value added tax...

Also atAt the meeting, the representative of the Government Office assessed that fighting transfer pricing and tax evasion is a very complicated issue, because the legal regulations in this field up to now have been ineffective.

“In the US, to determine a transfer pricing case, lawyers have to research and monitor for up to 7 years and it is costly. Meanwhile, to build and draft the Decree on anti-transfer pricing and tax evasion, the time given to the Ministry of Finance is very short, only 7 months, so it is necessary to be cautious and review carefully. We must try to meet the deadline, but I think it is a difficult task,” he said.

Illustration

Continuing, Minister and Head of the Government Office Mai Tien Dung said jokingly: "If it can be done, Americans will probably have to come to study."Giving advice on how to handle situations when a company is suspected of transfer pricing, the Head of the Working Group recounted the time when he was the leader of Ha Nam province. In 2010, despite receiving large incentives on taxes, land..., the Japanese company Sony still reported a loss of nearly 100 billion VND. At that time, he requested to meet the company's director and insisted that if the company was not doing business effectively, the land should be returned to the people for cultivation. The following year, the company reported a profit.

Recounting the experience, but the Head of the Government Office said,Tax losses related to transfer pricing are increasing, so strong measures are still needed to combat tax losses.He asked the Ministry of Finance to keep its promise to issue the draft Decree before November 30, as the agency had requested a 3-month delay compared to the regulations.

Minister Dinh Tien Dung pledged that the agency will complete the draft Decree as committed to the Government."Due to the complexity of the issue, the decree can only provide principles, the important thing is the implementation process," the Ministry said.said the Chief Financial Officer.

Previously, according to the Ministry of Finance's report, as of August 25, this agency was assigned 170 tasks, of which 95 were completed, of which 61 were on time and 34 were overdue. The Ministry still has 75 unfinished tasks (70 tasks within the deadline, 5 tasks were overdue). Recognizing that the tasks assigned by the Government to the Ministry of Finance are macro-level and difficult issues..., Minister Mai Tien Dung requested that this agency "not wait until the deadline to return the assignment".

According to VNE