Vietnam’s MoF Targets FIEs in New Tax Inspection Plan

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Apr. 13 – Vietnam’s Ministry of Finance has set up an important tax inspection plan for the year 2011. The objective of the plan is to ensure that enterprises do not commit any tax law violations in Vietnam and might allow to collect tax arrears and to uncover transfer pricing cases.

These inspections will focus on 82 enterprises across Vietnam, including 19 in the capital and 21 in Ho Chi Minh City. Among others, many foreign invested enterprises (FIEs) will receive visits from inspection teams.

The MoF’s plan follows 2007, 2008 and 2009 financial inspections of the same enterprises that had astoundingly revealed that, although declaring continuous losses, most-large scale FIEs were keeping on massive investment policies in Vietnam. Thus, many transfer pricing cases came out; indeed, it appeared that some FIEs had raised the prices of materials bought from their parent companies abroad in their tax declarations.

Through the tax inspection plan, the MoF aims to put an end to the unfairness due to these fraudulent methods. Although the FIEs enjoy many preferential policies and business conditions, the state does not receive any tax contribution from them and it is also unfair for local companies. Thereby, if tax law violations are to be proved, sanctions will be taken, and those could go as far as the withdrawal of these enterprises’ business licenses in Vietnam.

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