Enterprises report losses to evade tax Nearly half of enterprises in Ho Chi Minh City have reported losses annually, many of them are foreign direct investment firms who have reported losses for ten consecutive years to avoid paying tax.
These enterprises have seen turnovers ranging from tens to hundreds of millions of dong per year, yet have reported losses while continuing to expand their business and production.
For instance, Coca-Cola Vietnam Company has reported losses of about VND100 billion (US$5 million) per annum during over ten years, with 2008 seeing a loss of over VND130 billion ($6.5 million).
Meanwhile, the company has sponsored many television entertainment and game shows.
Clover Vietnam Co., Ltd., a printer ink manufacturer, in Cu Chi District has reported losses for many years too.
Clover reported it incurred a loss of VND16.7 billion ($835,000) in 2007, as it spent VND8.4 billion on management activities and VND12.3 billion on buying production materials while it earned only VND4 billion from selling its products.
In 2008, the company reported a loss of VND18.6 billion ($930,000), with the turnover being VND5 billion lower than the cost of products.
In total, Clover suffered losses of VND35.3 billion ($1.76 million) in two years, exceeding its chartered capital of VND12.9 billion ($645,000).
In 2009, Clover reported it make a profit of VND20 billion from selling products, but management expenses were VND20 billion, so the company broke even.
When the taxation agency warned the company about its risk of bankruptcy, the company’s leader pledged to make profits.
Woogwang Vina Co., Ltd. in Hoc Mon District was established in 2003. The company reported in 2008 that it had sustained the total loss of VND9.26 billion ($463,000) since establishment.
To avoid bankruptcy, the company had managed to raise its legal capital to VND10.1 billion.
After the taxation agency warned the company about the risk of bankruptcy, it reported profits in 2009.
Though Sunway Mario Plastic Joint Venture Company reported the total loss of VND7.2 billion in the 2005-2008 period, it continuously expanded business, with turnovers increasing every year, from VND17.5 billion ($875,000) in 2005 to VND543 billion ($27.1 million) in 2008.
The company’s losses made up 91 percent of its capital of VND7.9 billion.
When the taxation agency said the company’s financial status was at risk of bankruptcy, its director Nguyen Quoc Tuan said the capital was already raised to VND41 billion in 2009 so the losses made up only 18 percent of the capital, a giant clothing and footwear maker, has topped the list of exporters in Vietnam, but it reported losses for many consecutive years from 1998 to 2008.
Though the company reported losses for several years, its current registered capital is $288 million, up 240 percent from the initial one of $120 million in 1996.