Lax management gives rise to fake firms and budget losses: Official Deputy Director of the Ministry of Finance’s General Tax Department, Bui Van Nam, said in an interview that lax management has caused losses for the state budget.   Fake enterprises major loss for state budget The General Tax Department has conducted an inspection of eight enterprises involved in the Rung Toan Cau case for suspected swindling and asset misappropriation. What were the results? Inspections revealed that the eight companies involved in scams surrounding Rung Toan Cau Company have yet to register to print and issue receipts as well as have yet to begin operations, so they just have to pay a combined business license tax of VND85.5 million (USD4,049). They have been fined a combined VND110.6 million for submitting their income tax returns lately. They have also got deduction of a combined value added tax of VND52.7 million. They had a combined false registered capital of VND88 trillion which resulted in false growth numbers. The investigation reports on Rung Toan Cau have been a great help to relevant state agencies in investigating the case in which they took advantage of certain regulations in the Business Law to set up false companies that claimed to have a lot of registered capital in order to run a number of scams. What are your comments about the reported establishment of fake enterprises in several localities? Due to easy regulations on business registration, many localities nationwide have recorded cases where offenders used false receipts to reduce and even retrieve taxes. Such operations are rather sophisticated, and often thwart the efforts of investigators. Inspections have uncovered that many established companies did not operate in the place in which they were registered. In several cases, on paper, the leaders of these companies would end up being a motorbike taxi driver or a farmer who lacked knowledge of business and regulation. The Ministry of Finance has reported the situation to the government and proposed that the Ministry of Planning and Investment tighten control over business registration. What are some common misconducts by such fake enterprises? The establishment of false enterprises to trade in receipt and take advantage of value added taxes is diverse and multi-level. Recently, police in Can Tho City decided to arrest and prosecute some people who specialised in selling receipts to enterprises to earn a profit. The most prominent case has been Do Hoang Khanh, who set up Do Hoang Khanh Trade and Construction Limited Company in Can Tho City. From mid-2012 through June 2013, Khanh had sold 580 faked VAT receipts to 87 enterprises for a combined VND47 billion and a profit of VND3 billion. In some cases, people set up several companies in order to trade in receipts among them to turn a profit. One example of this is the case where Tran Van Duc, from Tra Vinh Province, set up three companies that traded in seafood, forest products and agricultural produce. These businesses actually did not work in these sectors, but simply printed and sold receipts. The three companies sold 291 faked VAT receipts to 38 enterprises with a combined value of over VND20 billion for illegal earnings of over VND2 billion between 2011 and 2013. Tra Vinh City police arrested the offenders and brought the case to the court. Other type of misconduct is to set up a series of enterprises in several different localities to act as a mediator in supplying receipts. In one recent case, five enterprises in Dong Nai Province had a combined registered capital of less than VND20 billion, but made revenues of as much as VND32.3 trillion from 2011 through June 2013. It has been estimated that such types of businesses have caused losses of VND1.617 trillion to the state budget through VAT tax deductions. What do you think of the situation in Hanoi? We’ve also found several enterprises in Hanoi that have taken advantage of incentive policies for special consumption taxes and export taxes. The most prominent case involved Hanoi Alcohol Company. They claimed that the export of alcohol qualified them to benefit from special consumption and export taxes. In fact, they exported rice instead. Thank you very much! Tienphong