The General Department of Taxation is trying to recover debts from some of the country’s biggest firms that complain they have been affected by the economic downturn.
 |
| Paying tax at Hanoi Tax Department |
At the seminar to address outstanding tax arrears on March 1, the General Department of Taxation under the Ministry of Finance announced outstanding tax arrears. Bad debts accounted for 1.1% of the State budget, a 0.1% increase compared to 2010, while those tax arrears likely to be recovered equalled 5.9%, a 0.8% increase compared to 2010.
The General Department of Taxation said those bad debts that would have to be written off were often the result of voluntary bankruptcy in cases where enterprises had not reported their closure to authorities. These companies accounted for 56.7% of total bad debts. The remainder was from firms established to illegally issue invoices which had subsequently closed to avoid their tax responsibilities.
But 72.3% of the debt is in the form of recoverable tax arrears, with 63.3% 90 days overdue.
Domestic giants such as the Hoang Anh Gia Lai Corporation owe the state hundreds of billions of VND. Other corporations owe tens of billions of VND, including the ship builders Vinashin, the Hanoi Construction Corporation and Cavico Bridge and Tunnel Construction Corporation.
The General Department of Taxation said these companies are currently unable to pay taxes because of the economic downturn, weak consumer spending; a real estate market in the doldrums or because of the Government’s tightened fiscal policy. Many companies have chosen to keep the money as operating capital and have rather be fined than make their full payments. Total tax arrears currently account for 6.9% of last year State Budget.
