This amount could well reach to the tune of VND 4,800 bn, that was mistakenly collected from over 1,000 companies in the form of taxes. Saigon Investment spoke with Mr. Pham Thanh Tung (photo), Chairman of Tri Viet Securities Corporation (TVB) and Tri Viet Assets Management Corporation (TVC) on this issue.
JOURNALIST: - Sir, now social distancing has more or less been lifted across the country. Will this be a way out for businesses to restart?
Mr. PHAM THANH TUNG: - As per the Prime Minister’s directive to the National Steering Committee for Covid-19 Prevention and Control, social distancing has been eased in 28 cities and provinces that came under risk groups, except some districts in Hanoi Capital, Ha Giang and Bac Ninh provinces. Yet we should not jump to a conclusion that Vietnam has won a comprehensive victory against the virus even though we are moving towards a milestone win where a number of infectious cases and deaths have now fallen to zero.
So far, Vietnam and some other countries around the world have given precedence and priority to the health of the community rather than to economic gains. When there is any positive sign of the pandemic fading, people will rush to revive and boost the economy again, because it is unfeasible to expect good health within the community to last in a stagnant economy.
A vicious cycle in every society is that high unemployment rate usually accompanies a sluggish growth, low income goes with poor health and poor nutrition, and decreased demand leads to shrinking of the supply chain. Over the past couple of months, the Government has not separated the policies for the current period from those for the post pandemic period. Some policies and measures have been very drastic, and some have been hardly unprecedented policies.
- Please can you clarify what you mean by “hardly unprecedented policies”?
- Decree No.20/2017/NĐ-CP was issued in 2017 to provide for the management of taxes of companies with associated transactions in order to prevent transfer pricing within corporations and their affiliates. However, Decree No. 20 has been applicable to all companies, which has caused lots of difficulties for domestic companies. Therefore, in December 2019, the Government issued a bill on amendments to Article 3, Clause 8 of Decree No. 20 in a move to make it easy for domestic businesses.
Since 2019, enough opinions have been collected for revision of the bill but the final step has not been taken. The bill has generally been supported, but there has been a lot of controversy over how the bill will be revised. Some opinions say it is necessary to remove all the inapplicable details of Decree No. 20 by changing the groups of companies it is applicable to. In that sense, the Ministry of Finance needs to revise the Decree in a way that it will be applicable to foreign companies only, because domestic companies are managed in accordance with the amendments to the Corporate Income Tax Law, which provides specific regulations on expenses and incomes related to the finances and loan interests of companies.
In light of the urgent need to provide support for companies, and also support for the economy to survive the current Covid-19 pandemic, Prime Minister Nguyen Xuan Phuc had asked the Ministry of Finance to initialize Decree No. 20 and present it to the Prime Minister for approval by 20 April. The amendment to Clause 3, Article 8 of Decree No. 20 raised the maximum loan interest rate of 20% to 30% as applicable to companies with associated activities.
What is notable is that the Prime Minister has asked the Ministry of Finance to return excess collected amounts to the concerned companies. That is to say, VND 4,785 bn will be returned to more than 1,000 companies this year in accordance with the revised Decree No. 20. Additionally, the Ministry of Finance has also been asked to take appropriate measures to ensure tough management in order to prevent problems like corruption and negative effects due to interests of groups of beneficiaries.
- How will the return of excess tax money influence companies?
- The return of excess tax money this year could be a considerable support for the corporate world and done at the right time as we say in the proverb, “one piece of food while hungry equals a big box of food while full”. The Government’s revision of Decree No. 20 is a great encouragement to companies, especially when the Covid-19 pandemic is still unpredictable, and continuing to cause a negative impact on business activities of companies in general, as it does to our two companies TVC and TVB also. The Government’s prompt move can help companies to cope with their current difficulties and restore production and business activities soon after the pandemic gets over.
For instance, Tri Viet Securities Corporation (TVB) provides customers with advice on securities. Though it does not have to take loans, the activities were seen as involving associated transactions. The problem was resolved by the revision of Decree No. 20, allowing TVB to continue to survive the challenges caused by the Covid-19 pandemic. The amount of excess tax money collected will be returned to our company and it will in turn enable us to develop our business plans and circulate our capital much more effectively.- Thank you very much.