The Nguyen Kim admiration has been charged as trying to avoid paying personal income tax by accounting parts of remuneration and extra payment of employees as overtime pay. This is the accusation reported by the Tax Department of Ho Chi Minh city.
According to Mr Nguyen Nam Binh, Deputy Chief of the Department of Tax in Ho Chi Minh City, this was clearly an illegal attempt to evade taxes payment under the law of Vietnam. Specifically, in this case, the director of the company is actually having the salary of VND300 million per month. In this total amount, 270 million VND would be title based perks (bonuses) and remuneration. However, with the accounting this as overtime pay, the company would only have to pay income taxes on 30 million VND
In the case of Nguyen Kim, of the total 147 million amount that Nguyen Kim is required to pay, 104 billion VND was label as back taxes; whereas the remaining 43 billion VND included tax evasion payment delay fines. Nguyen Kim is one of the example for big origination trying to avoid tax responsibilities in Vietnam. This electronic retailer currently operates 21 store all over the country. The average sale figure per year is $400 million.
According to Mr Nguyen Van Phung, director of Tax Administration, many enterprises do not have enough knowledge of Vietnamese tax regulation in many different situations. Most of them are heavily dependent on tax consultants, thus requiring the urgent need for competent accounting and financial agency like S4B Vietnam. As many channels have been used to publicize updated regulations to businesses, it is just only excuses to blame for ignorance of these update.
Since tax government aware the fact that the majority of violations related to tax is completely intentional, tax inspectors will increasingly investigate big companies for violations detection, consequently strengthen the enforcement of law.
In addition, may violations happen due to the negligence of incompetent auditing companies. It must have been the auditor’s responsibility to request the business to consult with tax authority. As tax was an integral part of a financial statement, companies should outsource the accounting and auditing part to a reputable and highly credible agency like S4B Vietnam.
Currently, tax obligations are reported to be one of the most significant burdens for companies operating in Vietnam. Due to profit maximization effort, companies often search for new methods to avoid mandatory tax payments. Vigorous monitoring and prosecution of tax fraud and evasion has been carried out by Vietnamese enforcement. From 2016, the General Department of Taxation has increased the penalty amount due to the fact that a number of listed companies on the two national stock exchanges have been committed tax violations. The penalties that these companies have to pay are calculated up to millions of US dollars as a result of lacking of tax regulations understanding.