Vietnamese businesses suffer from state inspections While businesses have to brace themselves up to overcome difficulties in the prolonged economic crisis, they are “harassed” by inspectors coming from various state agencies.   Binh Phuoc Livestock JSC, one of the businesses that suffer from being inspected so many times. Inspection activities of state management bodies over enterprises are regarded as one of the criteria for assessing the quality of economic management to promote enterprise development. However, in many cases, inspection is unnecessary and considered “harassment”. Inspectors try to find faults The Australian-invested Sunshine Food Vietnam Co. is considering filing an appeal to the Ministry of Finance against the sanction imposed by the HCM City Tax Department’s inspectors. According to this company, in November 2012, tax inspectors inspected this company and decided to collect arrears of over VND500 million ($25,000) (corporate income tax in 2007 and 2008 and VAT in 2007 and 2009) and imposed administrative fines of more than VND400 million ($20,000). The company did not agree with this decision so it sent a complaint to the HCM City Tax Department. The sum that it has to pay reduced to VND730 million in totals. Given that this decision was not satisfactory, in March 2013, the company lodged an appeal to the General Department of Taxation. According to Mr. Jeung Chhay Teck, Director of Sunshine Food Vietnam Co., during the inspection, inspectors asked the firm’s officials to sign the so-called "the minutes on the inspection record while they had not been read the minutes yet.” “Inspectors asked us to sign and stamp on the data that they knew to be incorrect. They used the data that we had not agreed as the foundation to set the sanctions. We explained very clearly that the data was printed at the time the accounting software was attacked by viruses. At that time inspectors told us to print the date for reference but then they used them as official data, although we sent them the accurate figures to calculate tax," he said. Jeung Chhay Teck said the firm met with representatives of the HCM City Tax Department and the General Department of Taxation many times but the case has not been solved. “Tax officials kept sending emails and called us asking for more records and additional explanations ... but they did not give us any instructions so we did not know how to do it properly," Mr. Jeung Chhay Teck added. The director of a HCM City-based company also had a headache for being “harassed” by the tax authorities. She said her company was established in 2011 in District 12 and it performed all necessary duties. Once, the district tax bureau carried out an inspection of business addresses, including the address registered by the firm. The inspectors went to a wrong address (four houses in this area have the same number). They then locked the corporate tax code of the company from August 2013. In November 2013, the company knew that its tax code was locked when it submitted the tax report. The tax department also claimed to withdrawal the firm’s bills and asked it to pay fine for tens of millions of dong. The firm lodged a complaint, with the local police’s verification that the company had been operating at the registered address. "At that time, the tax officials begged us to withdraw the complaint, then reopened the tax code for my company. But they turned to harass us by finding faults with everything we did,” the director said. Being inspected 17 times a month In December 2009, the Binh Phuoc Province People's Committee permitted the Binh Phuoc Livestock JSC to develop a pig farm with 7,200 pigs on 68.2 ha of land in Tan Lap Commune, Dong Phu District in 50 years. In March 2011, this company leased its farm to the CP Vietnam Company. In May 2011, Binh Phuoc authorities set up an inspection team to inspect the company. In August 2011, the inspection group sent a report to the Binh Phuoc authorities. "From that moment, our company began to be "harassed". Inspection teams of the police, rural security agencies, the Department of Agriculture and Rural Development, the Department of Natural Resources and Environment, the district authorities... kept inspecting our company for the same contents. The inspection lasted until May 2013 although in January 2012, Binh Phuoc province’s Chair issued a document confirming that our project was implemented under the law. We even had to receive up to 17 inspection teams in only one month, who came to inspect the same things," complained Mr. Vu Manh Hung, Chair of Binh Phuoc Livestock JSC. The climax of the "harassment" was in January 2013, the Environment Police Department inspected the firm’s compliance with environmental laws and proposed the provincial government to impose VND225 million ($11,000) on the company for not having waste treatment works and discharging excess wastewater to the environment. Mr. Nguyen Nhu Hoang, Deputy General Director of Binh Phuoc Livestock JSC, said that the local environmental police agency constantly raised difficulty for the firm’s operations in a wrong way. The environmental police met with shareholders to ask about their capital contribution and asked banks to provide records on the firm’s loans, etc. In December 2013, the Government Office asked the Ministry of Public Security to deal with the complaint of the Binh Phuoc Livestock JSC against the Binh Phuoc Provincial Environmental Police Agency for taking abuse of power, causing losses for business. The investigation result must be reported to the Prime Minister in the first quarter of 2014. When will “inspection harassment” end? Businesses say that inspections mainly come from fire-prevention, market management, environmental resources and taxation agencies. Mr. Dau Anh Tuan, Head of the Legal Department of the Vietnam Chamber of Commerce and Industry (VCCI), said that according to the Provincial Competitiveness Index (PCI), compiled by VCCI and the Initiative Competitiveness Project of the US International Development Agency, the number of inspections has reduced but businesses keep complaining about it in surveys. In the dialogue with the HCM City Tax Department in late 2013, Mr. Dang Van Thuan, a businessman in Ben Nghe Ward, District 1 bemoaned for having to receive a lot of inspection teams. In November 2012, the tax authorities decided to inspect his company. However, instead of working at the company, the inspection team asked him to bring related documents to the tax bureau. After over one year, the tax body did not invite him to their office to sign the records. Thuan said many businesses that were harassed by tax inspectors filled their complaint to the tax agencies but after that, tax inspector raised more difficulties against them. In some cases, when they found no fault in records, inspectors checked the warehouses, materials, equipment to "find faults". The director of a tax consulting company in HCM City said the tax inspectors imposed fines on his client on seven kinds of mistakes. When this company proved that it did not commit mistakes and lodged a complaint against the tax inspectors, the inspectors begged this firm to accept making the mildest mistake. Some businesses in industrial parks and export processing zones in HCM City said every year they had to receive a lot of inspection teams from all relevant ministries, sectors and of the management boards of EPZs and IPs. In the field of environment alone, they have to welcome inspection teams of the Environmental Police Agency, the EPZ - IZ Management Board, the Department of Natural Resources and Environment and the Ministry of Natural Resources and Environment. Each time inspectors come, companies have to prepare a lot of documents while the inspection content is the same. A member of the Executive Committee of the Vietnam Textile and Apparel Association, small businesses are regularly inspected than large enterprises. They are inspected by various inspection teams from relevant departments, districts and sectors. In many cases, inspectors only came to receive “envelopes” (money) and did some paperwork. Fearing trouble, businesses don’t dare to make denouncements According to the PCI 2012 report, in 2010, each company in Vietnam had to welcome 2.7 inspection teams. The number reduced to 2 in 2011 and over 1 in 2012. However, businesses keep complaining about “inspection harassment,” considering it their biggest difficulty. "Businesses must accept inspection conclusions because they could not cite laws to protect their arguments. Generally, they have to accept to pay a fine if they are inspected," a businessman wrote in a PCI 2012 questionnaire. The PCI research team found that businesses are afraid to denounce to the media or the watchdog agencies about the abuse and harassment of inspectors for fear of being further harassed in the future. Some inspectors collected information about businesses to provide to their opponents. In the last two years, companies complained the most about fire-prevention inspection. Over 650 foreign-invested enterprises received fire-prevention inspection teams, while 643 companies were inspected by natural resources and environment inspection teams and 363 companies were checked by tax inspection groups in 2010. For domestic companies, the most inspected areas were tax, fire prevention, market management and environment. Nguoi Lao Dong