Vietnam fuel companies suspected of dodgy tax practices

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Economists suspect that Vietnam's biggest fuel companies, particularly Petrolimex, may have deliberately reported huge losses and shifted profits to subsidiaries to evade tax.

A recent inspection of major oil importers, including Petrolimex, found that they paid retailers, many of them its own subsidiaries, higher commissions than allowed and reported huge losses.

According to the Ministry of Finance, Petrolimex reported losses of VND1.8 trillion (US$85.7 million) in the first six months. But minus the illegitimate commissions, the loss was only around VND1.3 trillion.

The maximum commission allowed is VND600 per liter, but the ministry said Petrolimex paid up to VND1,000.

Economist Le Dang Doanh told Thanh Nien that Petrolimex may have reported the massive loss just to justify price hikes. At the same time, it may be paying high commissions to retailers to compete with other importers.

There is suspicion because the company reported losses but its subsidiaries enjoyed profits, Doanh said, calling for officials to look into the company.

It was also strange that a fuel distributor had to give in to retailers and agree to pay high commissions, he said.

"The high commissions mean there must have been some kind of collusion between the fuel companies and their retailers." 

Another economist, Nguyen Ngoc Tuyen, said auditors and inspectors need to step in to decide whether Petrolimex illegally transferred profits to its subsidiaries.

But inspectors had already found the company selling fuel below cost price to retailers, he said, calling it an unhealthy practice. The motive behind such a practice must be to protect its market position, he said.

Petrolimex is Vietnam's largest fuel trader with a market share of around 60 percent.

Even if Petrolimex paid out high commissions, it did not mean the company was losing money since it wholly and partly owned many fuel retailers, Tuoi Tre newspaper cited experts as saying Wednesday.

Petrolimex has more than 2,100 gas stations around the country, and sells products to 4,000 other retail agents.

Almost all major fuel importers also operate the same way, Tuoi Tre said.

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