Business Beat: Dong Nam scandal stains bank worker’s hands
The Pandora’s box that is the Dong Nam Associates tax scam has thrown up yet another crime by the country’s leading mobile phone dealer – illegally sending millions of dollars out of Viet Nam with the connivance of a bank official.Investigators made the startling revelation that the company has not just been enriching itself at the cost of the exchequer but sending this ill-gotten wealth abroad through a henchman at the HCM City branch of Techcombank.
Hoang Ngoc Diep, an officer at the bank, helped it move out US$20 million before being discovered. The modus operandi was for Dong Nam to open an account at the bank and with bogus trade deals, without really importing anything, making payments to fictitious parties – themselves really – abroad.
Investigators also said last week that they have identified some airline flight staff who helped Dong Nam smuggle in mobile phone sets at $20-30 apiece.
Logistical loopholes
Licensing officials, it appears, should keep abreast of the developments in semantics, not to speak of business developments, if they do not want mud on their face.
Consider this case. Regulations forbid 100 per cent foreign-owned freight forwarding businesses in the country and foreign firms usually operate through local agents or enter joint ventures with Vietnamese partners.
Following the radical changes the sector has undergone, businesses now prefer to call themselves logistics companies rather then freight forwarders. But somebody forgot to inform the government establishment of this. The result? "Logistics" companies seem to have escaped the ban applying to foreign-owned "freight forwarders" and one hapless planning and investment department actually issued a licence to a 100-per-cent-foreign logistics company. Tickled by the gaffe, businesspeople in HCM City said officials could rely more on the expertise of trading associations to avoid such embarrassments.
Driving hard bargains
once bitten, twice shy could well sum up some HCM City taxi companies that sold cabs to their drivers. Hoping to save on maintenance and management costs, several companies sold taxis for VND100-200 million to the men who were driving them.
The latter found it a good deal, for, after paying the sum in instalments, not only could they keep most of their earnings, but also the company name. So far, so good. only some of them got a little greedy and began cheating passengers with tampered meters and other tricks. In spite of lending their names to the cabs, companies could do little in reality to make the new owners behave. The matter became even worse where the first driver sold the taxi to another.
Rueful companies are now thinking of stopping sales of taxis to the drivers or at least stricter contracts that would make it hard for the drivers to give company prestige a quick burial.
Tax brackets to bend
The plan to overhaul three major tax laws is moving faster than expected. Last week the Government discussed the detailed proposals made by the Ministry of Finance, which if approved by the National Assembly later this year, will take effect early next year.
The draft proposes a single corporate income tax for both domestic and foreign-invested enterprises, at 28 per cent across the board. The average rates now are 33 per cent for the former and 25 per cent for the latter. Local companies have for long been bemoaning the difference and asking for equal treatment.
The proposal also seeks to abolish the additional 25 per cent tax rate slapped on domestic companies if their profits exceed a certain level. Besides, it rids foreign companies of profit remittance tax, now at 3, 5 and 7 per cent.
The increase in tax-deductible expenses for advertising and promotion from 7 to 10 per cent would gladden businesses of all stripes for the low ceiling is thought to hamper start-up companies from building a strong brand.
The Ministry of Finance has also proposed that the value-added tax laws be amended to have only three rates instead of four, with the highest rate of 20 per cent abolished. The rate is now applied to lottery businesses, freight forwarding, brokerage, and gold and precious stone trading.
The draft seeks to bring motorbikes and the lottery under the special consumption tax net, proposing 30 and 15 per cent on them respectively.
VNS
