The Ministry of Finance (MoF) is demanding more than VND1.9 trillion (US$85 million) in tax arrears from Electricity of Viet Nam (EVN) after uncovering that the group had failed to declare its costs accurately.— Photo vnexpress.net

The Ministry of Finance (MoF) is demanding more than VND1.9 trillion (US$85 million) in tax arrears from Electricity of Viet Nam (EVN) after uncovering that the group had failed to declare its costs accurately.

The finance ministry asked EVN to pay to the State budget VND88.2 billion worth of corporate income tax and VND877.46 billion worth of post-tax profit for 2015.

The tax arrears for 2015 were due to EVN listing a VND1.34 trillion gas pipeline project connecting Phu My - HCM City into its expenses in 2015.

The ministry determined the listing did not follow the instructions of Deputy Prime Minister Trinh Dinh Dung.

EVN was also asked to make an additional payment of VND969.56 billion worth of corporate income tax that should have been paid for the firm’s result in 2016.

The figure was extracted from the firm’s financial income of more than VND4.8 trillion thanks to foreign exchange rate differences, which EVN should have included in its 2016 financial report.

Earlier, the Ministry of Industry and Trade asked the Prime Minister to allocate the costs into EVN’s expenses in the years after 2016.

The Prime Minister approved the proposal and required EVN to divide the costs into two years of 2016-17. However, EVN allocated the costs in 2015 and 2016, reducing its profits by VND1.34 trillion.

The ministry claimed the cost allocation affected power prices.

It also asked the General Department of Taxation to collect the tax arrears.

In response to the MoF’s decision, the State-owned group on Thursday sent a press release to media about the issue.

EVN said it allocated more than VND1 trillion into costs in 2015 instead of 2017. The foreign exchange difference profit of VND4.87 trillion mainly came from Nghi Son 1 Thermopower Plant. This was one of the power plants with its accounting done by the Power Generation Corporation 1 (Genco 1).

However, the project borrowed capital from the Japan International Cooperation Agency (JICA). According to JICA’s requirement, EVN must continue to be the project’s investor. After it completes the construction, it could transfer management to Genco 1.

EVN said it reported the situation to MoIT. The ministry in 2013 allowed EVN to be the investor of the project.

EVN thought that the profit of the foreign exchange difference must be transferred to Genco 1. This is why it has been completing procedures to hand over Son 1 Thermopower Plant to Genco 3 by the end of this year.

It added that the cost allocation in 2015 instead of 2017 was an effort to save costs to reduce pressure on power retail tariffs.

EVN is continuing to communicate with the Finance Ministry to resolve the issue.

“EVN will strictly follow the decision of the PM and MoF,” the firm added.

On December 1, the group raised retail power prices by 6 per cent to VND1,720 (7.6 US cents) per kWh from the VND1,622 (7.1 cents) per kWh. — VNS