List of petroleum companies with huge tax debts

On January 12, the Ministry of Industry and Trade issued Decision No. 63/QD-BCT on revoking the Certificate of eligibility to act as a petroleum wholesaler for Hai Ha Waterway Transport Company Limited.

Hai Ha.jpg
Hai Ha's petrol business records have been transferred to the police.

Hai Ha Waterway Transport Company Limited currently owes more than VND1,700 billion in taxes, mainly environmental protection tax. Meanwhile, in 2021, this enterprise owed about VND815 billion; in 2020, it owed about VND761 billion.

Another oil giant, Nam Song Hau Petroleum Investment and Trading JSC, is also in debt. The Hau Giang Provincial Tax Department had to issue a decision to enforce tax by stopping the use of invoices for Nam Song Hau Petroleum Investment and Trading JSC (in Chau Thanh District, Hau Giang Province). The reason for the enforcement was that this company had tax arrears of more than 90 days. The amount of money being enforced at that time was more than 1,000 billion VND.

In addition, the Chairman of Thien Minh Duc Group Corporation was also issued a temporary exit suspension notice by the Nghe An Provincial Tax Department at the end of December 2023. The reason for the temporary exit suspension is that Ms. Chu Thi Thanh is the legal representative of this enterprise, and is in a case of being forced to execute an administrative decision on tax management and has not fulfilled her tax payment obligations. It is known that Thien Minh Duc enterprise owes more than 728 billion VND in taxes and is being forced to stop using invoices from July 2023 to July 2024.

Previously, another oil and gas giant, Xuyen Viet Oil (whose leaders have been prosecuted), still owed the state budget over VND1,528 billion. Notably, of the total tax arrears mentioned above, environmental protection tax was over VND1,244 billion. This tax arrears arose on monthly declarations, from October 2021 to July 2022.

According to the report of the General Department of Taxation, as of October 31, 2022, a number of petroleum terminals still owed and had not paid the State budget the environmental protection tax of VND 6,323 billion. As of September 30, 2022, 6/15 inspected terminals owed environmental protection tax of VND 3,219 billion.

In November 2023, the General Department of Taxation also requested the Tax Departments to immediately implement measures to urge and enforce the recovery of environmental protection tax debts of petroleum trading enterprises. In case the enterprise commits to pay gradually, the Tax Department will guide and consider handling the gradual payment according to regulations if the enterprise completes the gradual payment dossier.

Xuyen Viet Oil.jpg
Xuyen Viet Oil leaders were prosecuted and arrested, leaving behind huge tax debts. Photo: Luong Bang

Where does the huge tax debt come from?

Explaining the high tax debt, in a document sent to the authorities, Nam Song Hau Company said that it had fulfilled its tax obligations well before 2022. However, in 2022 alone, despite the high fluctuations in world oil prices, based on the Prime Minister's telegram 160/CD-TTg dated February 22, 2022 "Regarding ensuring the supply of oil for the domestic market", the Ministry of Industry and Trade has issued official dispatches directing the assurance of oil supply in the domestic market"... Accordingly, this company must ensure sufficient supply of oil for the Mekong Delta region (more than one million tons), to avoid shortages.

"Especially, when prices increase, as a private company, the company's financial resources are limited and very difficult (because we do not receive capital support like large state-owned corporations), but we still have to maintain operations, not to interrupt the supply, and have to sell gasoline at a selling price lower than the purchase price according to the State's direction for the common good, to ensure social security and local economic development," the company explained.

At the same time, the company also explained: "Because the selling price is lower than the buying price, many dealers nationwide are discounted "0 VND", but more than 500 dealers in the company's system still have our discounts increased from 200 VND/liter to 400 VND/liter. Moreover, there are many areas not in the company's market share that are lacking in supply. When we know, we are ready to share our gasoline (up to 50,000 m3) to serve the lives and agricultural production of your locality.

Therefore, the company's petroleum business in 2022 suffered a heavy loss of up to VND 236 billion (audited financial report). Of the VND 1,252.4 billion tax debt, VND 286.8 billion is late payment penalty arising during the difficult period of the Covid-19 pandemic. Currently, the authorities plan to propose to erase this late payment to support businesses affected by the Covid-19 pandemic. In case of no exemption or reduction, the company is also willing to pay the debt in accordance with regulations. The remaining is environmental protection tax: VND 690.8 billion (currently VND 573.3 billion), special consumption tax: VND 101.2 billion, value added tax: VND 148.8 billion, corporate income tax: VND 15.1 billion and personal income tax: VND 10.1 billion.

"Currently, our company is implementing many feasible solutions to fulfill tax obligations to the State as soon as possible, no later than June 30, 2024," the company committed.

Mr. Giang Chan Tay, Director of Boi Ngoc LLC, acknowledged: The fact that businesses owe huge taxes has been going on for many years but has not been revealed... Just because the policies are too outdated, outdated in terms of costs and management perspectives, and outdated in terms of listening ability, businesses always face difficulties and losses. This leads to no business that does not owe taxes.

"The thing is, small businesses do not owe taxes because they cannot bear the pressure of tax collection and penalties from the tax department, so they do not owe taxes but owe banks. Businesses always borrow from banks to fulfill their tax obligations, so every business is deeply in debt to banks, not in debt to taxes. Only large businesses, when they are exhausted, will let things happen," said a representative of this business.

Answering a reporter's question regarding petroleum enterprises with large tax debts, Deputy General Director Mai Son said that out of 34 petroleum enterprises, about 10 enterprises currently owe environmental protection tax.

Explaining the debt of petroleum enterprises, Mr. Mai Son said: According to the Law on Tax Administration, enterprises calculate, declare and pay according to regulations; tax authorities are responsible for checking, supervising and urging tax declaration and payment. For the above enterprises, tax authorities have implemented measures to urge and enforce tax debts according to regulations. Regarding the tax debts of enterprises in general, the General Department of Taxation strictly controls and directs local tax departments to properly implement the provisions of the tax administration law.

According to regulations, for debts that are due for enforcement, the tax authority will enforce the account, stop using invoices, prohibit the legal representative from leaving the country, and seize assets... However, the leader of the General Department of Taxation explained: When implementing measures to seize assets for tax-debt enterprises in general, there are many difficulties, for example, most of the assets of the enterprise have been pledged or mortgaged at the bank.

"In 2024, to prevent businesses from owing taxes, the Tax sector will focus on early analysis of business activity information and financial reporting data of businesses. Tax management will be based on the principle of businesses self-declaring and self-paying, tax authorities will monitor, and businesses that intentionally violate will be handled according to the law," said Mr. Mai Son.

Oil and gas tycoon: Huge tax debt, still lending 'big boss' thousands of billions to spend Although still owing the budget for environmental protection tax, oil and gas "big guy" Thien Minh Duc still lent Mr. Chu Dang Khoa and Ms. Chu Thi Thanh 7,485 billion VND for personal use.