Finance ministry blames tax defaulters for government's lack of funds

By Anh Vu, Thanh Nien News

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 A tax office in Vietnam. Photo: Binh Minh
Deputy Minister of Finance Do Hoang Tuan Anh has slammed tax defaulters, many of whom are financially capable, saying they are partly responsible for the government’s budget struggles.
Speaking at a press conference Monday, he said businesses' back taxes were worth VND76 trillion (US$3.36 billion), of which they had the wherewithal to pay almost 45 percent.
Many businesses are "big" but have "very little" awareness and deliberately avoid paying taxes, he said, citing the case of Vietsovpetro, an oil and gas joint-venture established by Vietnamese and Russian public companies.
The company's taxes were estimated at $86 million last year when crude oil prices were over $100 a barrel, but it has kept making excuses such as recent drops in oil prices to delay payment, he said.
In July the finance ministry released a list of 600 top tax defaulters around the country in order to shame them into paying taxes.
Among them, with their total tax debts exceeding VND12.65 trillion ($560.16 million), were high-profile state-owned companies like construction firm Vinaconex and property developer Song Da - Thang Long.
Anh's condemnation of tax defaulters came amid forecasts that the government’s revenue will fall be at least VND31.3 trillion ($1.38 billion) below the year’s target due to a sharp decline in crude oil prices.
The government plans to sell its stakes in 10 companies, including major ones like Vinamilk and FPT, expecting to earn VND40 trillion ($1.77 billion) from it, and earmark a fourth of it to make up for the revenue shortage.
The government has also sought the National Assembly's approval to sell $3 billion worth of sovereign bonds overseas to repay debts due in 2015-16.
Write-off for SOEs?
Even as Anh promised at the press conference that his agency would force wealthy tax defaulters to pay, the government has sought lawmakers' approval for a plan to waive the tax debts of selected state-owned enterprises.
SOEs that are in the process of equitization and whose back taxes are equal to or bigger than their accumulated losses will have their taxes waived. The rule is meant to help SOEs maintain a high enough level of equity to complete equitization, according to the government.
SOEs that are allowed to shut down but cannot afford to pay their back taxes and fines should also have their debts waived, according to the government.
The plan, part of the government's draft amendments to the Tax Law, will take effect on January 1 if approved. It is expected to waive a total of VND10 trillion ($442.81 million) in back taxes.
Speaking to Thanh Nien, several economists voiced their objections to the plan, saying it is "unacceptable" that the government uses equitization as an excuse to waive SOEs’ back taxes.
Nguyen Hoang Hai, general secretary of the Vietnam Association of Financial Investors, said the government needs to let those businesses that suffer too big losses go bankrupt.
Businesses that are profitable but evade taxes must be severely punished, he said.
A few legislators, despite supporting the government proposal, are also worried it can cause a backlash.
Vu Tien Loc, legislator and chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said the plan needs to be executed fairly and transparently, or it would abet corruption.

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