Part 4: Many other tax violations

During a long time period, from 2009-2012, Dai Nam JSC deliberately posted ambiguously sale transactions, did not separate transactions. Until the inspection, the company arbitrarily separated costs for each activity. This reflected inaccurately business activities and transactions of Dai Nam JSC, leading to wrongful fulfillment of financial obligations, tax payment. Moreover, during the inspection, the Inspectorate detected many other tax violations of Dai Nam JSC.

Using invalid documents

Namely, payable value-added tax (VAT) from 2009 to 2014 must be higher, because the company applied discounted land price according to the Ministry of Finance’s Circular No. 129/2008/TT-BTC dated Dec 12^th 2008 that was no longer valid. According to Circular No. 06/2012/TT-BTC dated Jan 11^th 2012 guiding the implementation of Decree No. 123/2008/ND-CP dated Dec 8^th 2012 of the Government and Decree No. 121/2008/ND-CP dated Dec 27^th 2008 of the Government, the Inspectorate calculated the right amount, that was VND 13,538,300,918; false declaration of natural resources tax and environmental protection fees; exclusion of purified water’s VAT for internal consumption, the amount was VND463,495,571. Total VAT arrear was VND 14,001,796,489.

Inspection Conclusion No. 2735/KL-UBNDdated Aug 13^th 2015 stated that Dai Nam JSC had allocated improperly costs from 2009 to 2012.

Regarding natural resources tax and environmental protection fees, Dai Nam JSC declared the false natural resources tax rate from 2009 to 2011 not according to Decision No. 249/2003/QD-CT dated Oct 15^th 2003 and Decision No. 43/2010/QD-UBND dated Nov 19^th 2010 of Provincial People's Committee on specifying tax rate of water and mineral resources; declared the false environmental protection fees in 2012 not according to Decision No 32/2012/QD-CT dated Aug 1^st 2012 of Provincial People's Committee on regulating the collection, management and use of environmental protection fees for environmental mining, Decree No. 74/2011/ND-CP dated Aug 25^th 2011. Total arrears was VND115,996,877 including VND104,028,602 of natural resources tax in 2009-2011 and VND11,968,275 of environmental protection fees in 2012.

Regarding corporate income tax (CIT), as we analyzed in previous parts, Dai Nam JSC calculated inaccurately some costs, was excluded when calculating taxable income according to Section IV, Part C and Part G of Circular No. 130/2008/TT-BTC dated Dec 26^th 2008 of the Ministry of Finance that was VND37,872,862,047 including VND9,644,301,354 of reduced interest rate; VND26,218,388,290 of reduced sales expenses; VND522,727,081 of reduced management costs; VND856,348,910 of reduced financing costs; and VND631,096,412 of reduced other expenses. After separating costs for each transaction and reallocating common expenses of the company’s operations in accordance with regulations and adjusting revenues and costs, total payable corporate income tax from 2009 to 2013 of Dai Nam JSC increased VND44,534,820,463.

Slow implementation of conclusions and recommendations after inspection

Inspection Conclusion No. 2735/KL-UBND dated Aug 13^th 2015 of Provincial People's Committee also stated that Dai Nam JSC had not implemented seriously conclusions and recommendations after inspection. Through inspection records dated Apr 2^nd 2013 of General Department of Taxation’s Inspectorate, Dai Nam JSC declared insufficiently their tax liability in 2011 including VND1,580,427,813 of VAT, VND11,067,871,940 of CIT, because the company applied preferential CIT rate and 2 different reduction times. Namely, the first one was, if the company had applied CIT rate of 25%, payable CIT would have been decreased 50% according to investment incentives certificate No. 119/CV-UB dated Oct 1^st 2003 of Provincial People's Committee. The second one was to apply preferential CIT rate of 10% according to Article 8 of Decree No. 69/2008/ND-CP dated May 30^th 2008 of the Government on preferential policies to socialization activities in education – training, vocational training, health, culture, sports, environment. In these 2 above cases, the company can only choose one; but in fact, the company applied simultaneously two cases including incentives and exemptions, thus the Inspectorate suggested a payable CIT of VND11,067,871,940.

At the conclusion and recommendations of the record dated Apr 2^nd 2013, the Inspectorate asked Dai Nam JSC to review their tax declarations to make adjustments and pay taxes to State budget. But the company did not review their tax declarations. More than one year later, as provincial Tax Department issued Inspection Decision No. 6434/QD-CT dated Oct 16^th 2014, the company sent a document for deferral. On Dec 12^th 2014, an inspection team of provincial Tax Department came to the company to announce Decision No. 7692/QD-CT, but Dai Nam JSC deliberately delayed. On Dec 30^th 2014, Dai Nam JSC paid a tax amount of VND14,906,849,526 including VND8,563,324,898 of year 2009 and VND6,343,569,628 of year 2010. On Jan 8^th 2015, Dai Nam JSC submitted an additional declaration on the same day that Provincial People's Committee’s Inspectorate announced the inspection decision at Dai Nam JSC. This action was wrongful, Dai Nam JSC knew that but still deliberately delayed the implementation. (to be continued)

 
By Reporters – Translated by Ngoc Huynh