>> Mega FDI projects have investment licenses revoked in 2010
>> Enterprises report losses to evade tax
Foreign direct investment (FDI) tea firms in Lam Dong Province admitted faking losses after a task force was set up to investigate the figures that have been handed in for years.
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| Harvesting tea |
The provincial Tax Department set up a supervision task force on tea exports to look into the reported losses, check tax declaration documents and collect related information.
After that, they studied documents, export contracts and each foreign-invested exporter’s accounting reports to compare their business results to local ones operating in the same areas. The task force detected exporting prices were much lower than production costs.
An official from the local Tax Department said that tea companies sold one kilogramme of tea at USD2.8-USD4 compared to the production cost of up to USD8-USD9 to report losses. However, after tea products were transferred to their parent companies in foreign countries, the products were divided into bags of different sizes, labelled and then sold at from USD5.5 to USD11.6 per kilogramme (two and three times higher than the reported levels).
Based on the results, the department said reporting losses is only a trick for FDI firms to evade corporate income tax.
The department has inspected and instructed 17 FDI tea companies to solve their reported combined losses of VND316.5 billion (USD15.82 million) as of December 31, 2009 and requested them to pay a total corporate income tax of VND8 billion (USD400,000).
The Lam Dong Tax Department’s efforts have helped to detect tricks FDI companies often use for tax evasion and create an equal opportunity of competition between local and FDI firms in the same areas.
To date, Lam Dong Province has licensed 114 FDI firms, including 17 tea companies.
