State Audit Office seeking to collect $18.7 million in special consumption tax arrears for 2013 from Saigon Beer-Alcohol-Beverage Joint Stock Corporation.
The State Audit Office has submitted documents to the Ministry of Finance proposing the collection of VND408 billion ($18.7 million) in special consumption tax arrears for 2013 from the Saigon Beer-Alcohol-Beverage Joint Stock Corporation (Sabeco).
After auditing the corporation, the Office found that Sabeco has been evading taxes for years by establishing ten regional trading companies where it owned 90-94 per cent of shares. Sabeco would distribute products at low prices to the Sabeco Trading Company, which would then be distributed to the regional trading companies at a higher price before being sold to other distributors and wholesalers.
Mr. Phan Dang Tuat, Chairman of Sabeco, told VET that there is no practical basis for the proposal from the State Audit Office because excise tax is supposed to be levied on producers, not traders. Furthermore, using the selling price of regional trading companies can cause a “double tax” situation, with value added tax applied.
“Sabeco have been paying tax pursuant to all legal instructions,” Mr. Tuat added. “The corporation is 89 per cent State-owned and a major part of its revenue is returned to the State budget, so why would we evade our taxation obligations? After paying excise tax, we pay revenue tax to the State budget, and then share dividends, most of which also go to the State budget. Last year we contributed VND13.5 trillion ($618.8 million) to the State budget.”
He also raised questions about the auditing results. “In 2012 the same auditing team audited Sabeco and concluded that all our activities were in accordance with the law,” he said. “This year the same team audited Sabeco and came to a different conclusion.”
However, he added, if the final decision of the State Audit Office, the Ministry of Industry and Trade (Sabeco’s governing organization), and the General Department of Taxation (under Ministry of Finance) is that Sabeco must pay tax arrears, then it will do so.
The State Audit Office proposes to use the sales price of these regional trading companies as the price for tax purposes rather than the price at which Sabeco sold the products to the Sabeco Trading Company, which the corporation has done in its tax declarations.
The proposal would add VND408 billion ($18.7 million) to its tax obligations for 2013.
According to Circular No. 05/2012/TT-BTC from the Ministry of Finance on January 5, 2012, guiding the implementation of Government Decree No. 26/2009/ND-CP on March 16, 2009 and detailing a number of laws on excise taxes, when an excise tax-liable goods producer sells goods via traders the price used for tax calculations is the producer’s selling price (exclusive of value added tax and environmental protection tax, if any), which must not be 10 per cent lower than the average selling price applied by these traders. If a producer’s selling price is more than 10 per cent lower than the selling price applied by traders, the taxed price shall be assessed by tax authorities under the Law on Tax Administration and its guiding documents.
The State Audit Office has also proposed the government change the way of identifying the taxed price to avoid the use of legal loopholes to maximize profit.