Business Beat
Scandalous frauds in value-added tax VAT refunds have resulted in an easy solution from tax authorities: a temporary halt of the refund for businesses trading agricultural products, including foods and fisheries. Previously, companies could buy products from farmers, without invoices, and claim refunds for their declared purchases. This has been a big loophole for tax frauds – bogus companies were set up and claimed refunds for non-existing purchases. In the past three-and-a-half years, tax authorities have discovered illegal refunds worth VND432 billion, or 3.2 per cent of all refunds. In a proposal, the General Tax Department suggested either this kind of refund is abolished or the amount is reduced to 1 instead of 2 per cent. The VAT law passed by the National Assembly says refunds should be between 1 and 5 per cent. Therefore, any attempt to remove it should be approved by the National Assembly, and not the Government. Pending a final decision, tax authorities are designing measures to fight tax frauds. Refunds are only issued after all documents have been verified and not before. Also, the time limit tax agencies have to complete refunds will be lengthened, without penalty for delayed refunds. It would be a shame if several swindlers could derail a tax system and bring unnecessary difficulties to law-abiding companies. A simple requirement could thwart any fraud attempts – asking exporters to channel payments through banks, including border trade.***
While other Asian countries reported serious illness from slimming products, similar diet pills containing banned substances are also found in Viet Nam. Health officials said they found Slim 10 which contains fenfluramine, a substance that has been linked to heart, thyroid and blood problems, on sale in HCM City. In fact, other products are readily available here, including Quick-Slim containing dexfenfuramine, Lipobay, or Diet-B containing PPA. But the most typical diet product that causes quite a stir here is a kind of seemingly harmless tea. Women rushed to buy Tam Diep tea as they believed advertisements stating the drink would help them shed extra weight. and rush they did, but into the toilet because drinking this kind of tea causes severe diarrhoea. Local newspapers carried horrible tales told by women who said they’d rather be fat than drink another cup of Tam Diep tea. So far, health officials have made no decisions on this product; perhaps because it is not a pharmaceutical product?
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Operators of the toll gate on Thang Long-Noi Bai Road prefer to collect tolls manually, although they can do it in a more modern way. Cars with a smart card stuck on the windshield can pass the gate without stopping; an electronic eye attached to the gate can read the card, verify validity and automatically deduct the toll from the card’s value. Automatic collection advantages are obvious – no bottlenecks, no cheating, less manpower. But operators said they could not apply this collection method because drivers did not want it. They need written proof they pay the toll so that they can claim it back from employers, and employers need proof for tax purposes. Another proposal from toll-gate operators was rejected by the Finance Ministry, although it was obviously beneficial to all parties. For roads that cars have to travel on twice, like the road to Noi Bai Airport, the proposal said it would be better to collect the double toll just once. This would save half the work for collectors and drivers. But the ministry said implementing the proposal would mean doubling the toll, which was unacceptable.
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Equitisation, the Vietnamese-coined word to describe the process of turning state-owned companies into share-holding companies, is slowing down. In the 1999-2000 period, up to 92 per cent of companies slated for equitisation were successfully restructured. But in the first six months of this year, the ratio dropped to 13 per cent. Policy-makers said the reasons might lie in the post-equitisation stage. No statistics are available on how many equitised companies re-wrote their charter, organised general share-holding meetings, or publicised financial statements to shareholders. Equitised companies often do better than before, but they might operate even more efficiently if the management underwent radical changes. Most equitised companies kept the old management with their old ways of doing business. As more than 80% of workers sold their shares right after equitisation, incentives to work for better dividends or better capital gains diminished. Meanwhile, equitised businesses want to have more leeway in day-to-day operations. Even if the State remains the controlling shareholder, it would be better if the State let equitised companies operate under the Enterprise Law and enacted its control through majority votes. This way, other shareholders would have a chance to voice their ideas at general meetings and protect their rights as minority shareholders. Anyway, Business Beat believes equitisation can only be sped up if the Government overhauls the operations of the stock market to facilitate listing of equitised companies. — VNS
