While granting enterprises freedom in doing business, the new Law on Enterprises may include regulations that manage such “freedom”. Last week the National Assembly proposed that the draft amendment to the Law on Enterprises include text that allows the examination of enterprises after they receive their business registration certificates and become operational. This is because under the draft, the certificates will not detail out an enterprises’ business sectors and professions. Such details must currently be declared in an enterprise dossier when applying for a certificate. Enterprises are currently allowed to operate only in the professions and sectors written on their specifically requested investment certificate. If they want to add an additional sector or profession, they have to undergo the entire licensing process again, which obviously causes major headaches for firms eager to exploit new business opportunities. “In-line with the Constitution, which allows companies to do business in any sector and profession not banned by law, under the new law expected to be adopted this November, you have the right to sell both pho and coffee, but how you are operating should be managed. The new law must have a mechanism to manage enterprises’ performance,” said National Assembly Chairman Nguyen Sinh Hung. “Enterprises can bend the law to do business. For example, they can open a karaoke palour, but then open a dance hall or bar. Thus, who will manage them if they keep changing their business?” said National Assembly Judiciary Committee Chairman Nguyen Van Hien. Mai Thi Anh Tuyet, the National Assembly deputy representing An Giang province, said that currently the state only managed enterprises’ business registration, but not their performance. “Consequently, many enterprises have evaded tax and conducted illegal transfer pricing, greatly diminishing the state coffers,” she added. Late last year, South Korea’s Keangnam Vina was found to be involved in a number of scandals related to transfer pricing. It admitted using the sometimes illegal business method to save and/or make $58 million. Last year in Dong Nai province, cloth-maker Hualon Corporation, a joint venture between Malaysia, Taiwan and the British Virgin Islands, was found to have imported machinery for less than $400,000. However, the firm reported to the local tax agency that it had cost nearly $16 million. The firm has also reported consecutive losses over the last 20 years in Vietnam. National Assembly Vice Chairman Uong Chu Luu said he was also disheartened by enterprises’ continued tax evasion. “I could not imagine that the inspections (in 2012 by the State Audit of Vietnam) of only 8 per cent of state-owned enterprises uncovered tax avoidance of VND3 trillion ($142.8 million). Those same inspections, of only 0.31 per cent of non-state enterprises, showed that VND765 billion ($36.4 million) in taxes has been dodged.” National Assembly deputy Tran Hoang Ngan, representing Ho Chi Minh City, also stressed the need for a mechanism in the new law to examine enterprises after they become operational. “Last year Vietnam had around 621,000 registered enterprises, of which only 356,000 were known to be operating. The status of the remainder is unknown, because the state can’t manage them,” Ngan said. By Thanh Dat
Posted on: Fri, 22 Aug 2014 08:34:54 +0000
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