Various reasons for tax debt

Many real estate businesses are on the list of tax debt. Photo: H.Dịu

Hanoi Tax Department is one of the units leading in tax debt in the country and debt recovery at enterprises that intentionally delay paying tax debt is always a headache.

In the first seven months of the year, this unit has "pointed" out hundreds of units that owe taxes, fees, and other land-related revenues. Recently, this unit has announced the identity of more than 200 businesses that owe tax at the closing period on May 31.

Long Giang Urban Development and Investment Joint Stock Company (Long Giang Land) has a "huge" tax debt of nearly VND54.4 billion, in which, corporate income tax is nearly VND16 billion; corporate income tax from real estate transfer is nearly VND14 billion; value-added tax of nearly VND7 billion; late payment of value added tax is more than VND6.5 billion and late payment of corporate income tax and other debts is more than VND6 billion.

Long Giang Land explained the reason for the tax debt and the company's settlement plan related to receivable debt from the budget in Ho Chi Minh City. Specifically, in 2011, the People's Committee of Ho Chi Minh City assigned Long Giang Land as the investor to build Lot C, including 288 apartments and works associated with apartments in Thanh Thai Apartment project to hand over to the People's Committee of District 10, Ho Chi Minh City to serve for the resettlement housing fund.

Right after that, Long Giang Land invested in construction and completed this project. By the end of 2018, Long Giang Land signed a contract with District 10 Public Service One Member Limited Liability Company - the unit appointed by the People's Committee of Ho Chi Minh City to sign a contract for the purchase of 288 apartments and all works associated with the apartment at Lot C Thanh Thai Apartment with a temporary value of VND252 billion (this value does not include bank loan interest and investor's profit).

However, after more than four years since the construction of Lot C of Thanh Thai apartment complex project was accepted and put into use by the Ministry of Construction and after nearly three years from the date the two parties signed the purchase and sale contract, Long Giang Land had not yet received any advances or payments from the HCM City budget under the signed sales contract.

Therefore, Long Giang Land had not been able to complete the payment of all budget debts, leading to the above tax debt. Currently, this enterprise has worked with the Hanoi Tax Department to guide the procedures on tax debt freezing because Long Giang Land is the subject to be considered for tax debt relief following the provisions of Article 4 of Resolution No. 94/ 2019/QH14 dated November 26, 2019 of the National Assembly.

The business situation of Long Giang Land also decreased markedly. In the past two years alone, the company's profit was only about VND4 billion. Debts receivable at the end of 2021 reached nearly VND900 billion. Entering 2022, in the first quarter, Long Giang Land recorded net revenue of more than VND52 billion, a profit of more than VND2 billion while the target set was up to VND650 billion in revenue and VND70 billion in profit after tax.

A familiar name on the tax debt list of the Hanoi Tax Department for many years is Lung Lo 5 Investment and Development Joint Stock Company. Starting in 2018, this business has been put on the "black list" with a number of debts up to hundreds of billions of dong. As of March 31, 2022, Lung Lo 5 still owed nearly VND345 billion, of which land use fee was nearly VND239 billion, the rest was late payment debt. According to the Hanoi Tax Department, this unit has owed tax since 2015 and the tax authority has applied coercive measures in accordance with regulations such as deducting money from the account and notifying the invoice that is no longer valid. However, Lung Lo 5 has not yet fully paid the outstanding amount into the budget.

Lung Lo 5 Company owes land use tax for the project of urban functional area Ao Sao - Lexington Etaste (Hoang Mai - Hanoi). This is a project invested by the company and built-in 2011. In the 2016-2020 period, 2018 is the first year that Lung Lo 5 suffered a loss of VND15.7 billion despite a sharp increase of VND56.7 billion in revenue. In 2019 and 2020, the company continued suffering a loss of VND39.7 billion and VND38 billion, respectively.

Along with the loss, the equity of Lung Lo 5 also "lost" gradually. In the last 5 years, 2017 was the only year that equity increased from VND507 billion to VND831 billion. After that, this number gradually dropped to VND708 billion (in 2018), VND587 billion (in 2019) and VND509 billion (in 2020).

Also in Hanoi, there are many businesses that intentionally delay paying tax and are considered doubtful debt by the tax authorities. For example, Graphite Group Joint Stock Company (with debt of more than VND4.8 billion); Tan Thanh An Development Investment and Trading Company Limited (debt of nearly VND3.8 billion); Phuc Thinh Invest Vietnam Joint Stock Company (debts of more than VND2.5 billion), Phuong Vien Trading and Service Joint Stock Company (debts tax obligations related to land, was disclosed for the first time with an amount of nearly VND21.5 billion).

These businesses have all been applied coercive measures by the Hanoi Tax Department.

Most tax departments across the country have continuously announced enterprises owing tax debts, in which land-related tax debts have always accounted for the majority of the total bad debts.

Recently, the Quang Ninh Tax Department has just published a list of 498 tax debtors for the June period. In particular, Quan Minh Co., Ltd owes over VND195.4 billion; Ha Long Group Joint Stock Company owes over VND35.2 billion; Hong Nguyen Investment Group Joint Stock Company pays taxes on behalf of foreign contractors over VND26.2 billion; Hong Hai Quang Ninh Real Estate Investment and Development Joint Stock Company owes more than VND15.2 billion.