VietNamNet Bridge – The Maseco company won an unprecedented lawsuit against the HCM City Taxation Agency, raising concerns about tax regulations and how they are implemented.

The issue began when the HCM City Taxation Agency asked Maseco, a company in HCM City, to pay value added tax (VAT) and corporate income tax (CIT) arrears for 2007 and 2008 fiscal years, and the fine for tax payment delay, totaling VND10 billion.

The taxation body believed that Maseco should pay a CIT rate of 28 percent beginning in 2007.

Maseco argued that it should have a preferential CIT rate of 20 percent until the end of 2011, saying that the taxation body’s decision on collecting tax arrears was unreasonable.

As the two sides could not reach any agreement, Maseco took legal proceedings against the HCM City Taxation Agency. It won the court of first instance and the court of appeals in June.

The unprecedented winning of Maseco over the taxation body has been applauded by the Vietnamese business community.

Analysts commented that with the event, businesses have found one more solution to settle disputes between them and taxation bodies, a solution they had never thought of in the past.

Complicated procedures

The Binh Minh Plastics Company recently was asked by the taxation body to pay tax arrears for the 2009-2012 and was fined a total of VND117 billion.

The company’s management board sent a petition to the HCM City Taxation Agency and GDT, saying that the company did not deliberately evade tax.

The problem, they said, was the inconsistency of the regulations on preferential tax rates for the companies listing their shares for the first time, which were stipulated in different legal documents.

The plastics manufacturer has asked for a delay in the tax arrears payment until the matter is clarified.

In reply, GDT decided that Binh Minh does not have to pay the fine of VND42 billion, but it still has to pay tax arrears of VND75 billion. GDT said the company can file a lawsuit if it does not agree with GDT’s decision.

The same problem is being faced by the HCM City Metal Corporation. It was told to pay tax arrears of VND3.5 billion.

According to lawyer Pham Ngoc Hung, who is also the deputy chair of the HCM City Business Association, in these cases, the problem lies in the inconsistency of the legal documents.

The Ministry of Finance’s Circular No 11924 in 2004 stipulates that the businesses listing shares for the first time were entitled to a 50 percent CIT rate reduction for the first two years after being listed.

In September 2006, the ministry released Circular 10997, removing the preference on the 50 percent tax reduction. But in 2008, the preferences resumed following a Ministry of Finance’s proposal to the Prime Minister.

“With the laws changing so regularly, everyone becomes confused,” he said, adding that taxation agencies themselves interpret the laws in different ways.

VNE