The big guys and the “tax payment delay syndrome”

VietNamNet Bridge – After Truong Hai Automobile got the permission to delay the payment of the VND1.2 trillion worth of import tax, a lot of other manufacturers have sent letters to the Prime Ministers asking for the same favor.


At least six automobile manufacturers, namely Xuan Kien Vinaxuki Automobile JSC, Thanh Cong Group JSC, TMT Automobile JSC, Hoang Tra Co Ltd, Dong Phuogn Automobile Co Ltd and VEAM, have been seeking the permission for the tax payment extension since early July.

Every time when receiving a letter begging for the tax payment delay, the government office has to forward to the Ministry of Finance for the ministry’s consideration.

The movement of asking for the tax payment delay has broken out after Truong Hai Automobile was granted the favor of delaying the tax payment of VND1.2 trillion worth of import tax.

Truong Hai, describing itself as falling down in a specially difficult situation, asked the government to allow its four subsidiaries to delay the payment of the tax sum for one year, from July 1, 2013 to June 30, 2014.

Deputy Prime Minister Vu Van Ninh then agreed to the proposal and then assigned the Ministry of Finance to deal with the case.

VEAM has also reasoned the same factors, that it has been facing a lot of difficulties since the day of beginning its operation due to the economic recession which caused the low sales.

Analysts have noted that when asking for the permission for the tax payment extension, enterprises all cite the same reasons. However, while Truong Hai openly said that it has the big inventories worth VND3.3 trillion and it was still owing VND5.6 trillion to commercial banks, VEAM did not provide detailed figures.

However, VEAM also said that it still has a big amount of unsold MAZ brand medium and heavy trucks.

Truong Hai said it now needs a huge capital to continue developing the project on the Chu Lai – Truong hai factory to be specialized in making automobile engines, the key project to enjoy many investment incentives granted to the mechanical engineering sector. Meanwhile, VEAM has also shown convincing reasons.

One of the most important reasons is that VEAM “has to implement and fulfill the duties of one of the four units which have been assigned by the government to develop the Vietnamese automobile industry.”

It has promised that the sum of tax would be poured into the production line of the factory which aims to increase the localization ratio of products.

However, there is still a big difference in the two cases. While Truong Hai has got the permission to delay the tax sum worth VND1.2 trillion, the sum of money is just equal to 1/6 for VEAM, about VND180 billion. The enterprise has asked to allow extending the payment of the import tax for car parts and materials from July 1, 2013 to December 31, 2014.

It’s unclear how the Ministry of Finance would handle the other cases, including VEAM. However, a lawyer has commented that all the businesses are equal before the laws, which means that once a business can delay the tax payment, others may also enjoy the same.

Under the current laws, tax payers can ask for the permission to delay the tax payment if they cannot pay on schedule because of the “special difficulties.” The Prime Minister would make the decisions on the proposal of the Ministry of Finance.

Phap Luat