Experts oppose tax exemption

Tuesday, Jun 14, 2016 10:28

A view of the Trang An eco-tourism and Bai Dinh Pagoda complex that is invested by construction company Xuan Truong in Ninh Binh Province. — Photo

HA NOI (Biz Hub) — Some experts expressed concerns about business inequality after the Ministry of Finance asked the Government to exempt automobile import duties for a tourism investor in the northern province of Ninh Binh.

According to the local press, construction company Xuan Truong wanted to import 20 "specialised vehicles", with 30-50 seats each, for use in the Trang An eco-tourism and Bai Dinh Pagoda complex that it invested in.

The firm planned to buy the vehicles to supplement its fixed assets, and petitioned the ministry for the tax exemption for them last March and May. The ministry reportedly asked Prime Minister Nguyen Xuan Phuc for a decision about the case this month.

In a document sent to the PM, the ministry said the project of Xuan Truong was located in an area with tough socio-economic conditions, and companies in this area enjoyed preferential corporate income taxes.

The Tràng An – Bái Đinh complex covers parts of Hoa Lư and Gia Viễn districts and Ninh Binh City. Gia Viễn particularly faces economic difficulties.

The ministry also said that the company was going to buy automobiles of a type that could not be built domestically now, so they should enjoy preferential tariffs, in accordance with Article 12 in Decree No 87/2010. The vehicles were expected to meet European emission standard Euro 5.

The ministry added that the tourism complex had been recognised by the United Nations Educational, Scientific and Cultural Organisation as a world natural heritage site. The site attracted up to 120,000 visitors per day in good seasons, driving socio-economic growth and generating jobs for thousands of local workers.

According to the ministry, the company undertook to use the vehicles to serve the traveling demands of visitors only inside the tourism complex free of charge, for a non-profit purpose. Therefore, a tax exemption would "facilitate tourism development" and "promote the image of Viet Nam".

"I don't understand what the Ministry of Finance has based their support on for such proposal of Xuan Truong Company," economist Pham Chi Lan told news website

"Viet Nam has many tourism complexes. If incentives are given to Xuan Truong, will other companies receive the same things? This is likely to cause unfair and unhealthy competition among them," she said.

Lan said Trang An – Bai Dinh was a tourist site and visitors must pay for services there. Xuan Truong was purely doing business, not charity or any public service. The Government should not accept its proposal, she said.

She said it was not a matter whether 20 vehicles were a small or great number. "Even one dong worth of tax exemption should be rejected, if it is unreasonable."

Lan said it was not the right time now for the ministry to do a company a favour, in a context that the country was fostering an equal business environment.

"I support Deputy Minister of Finance Do Hoang Anh Tuan who has been very determined about improvement efforts every time he talked about Resolution 19," she said, referring to a resolution that the Government has issued for the third year in a row asking for action plans to enhance competitiveness in the business sector.

"There are many things worth doing now to improve the business environment, especially tax affairs related to the numerous enterprises, especially small and medium-sized companies.

"In my opinion, the Ministry of Finance should concentrate on common matters of the business community. It shouldn't look after a few major businesses," she said.

Le Dang Doanh, the former director of the Central Institute for Economic Management, said no single enterprises should be favoured unless it was actually necessary to have special policies for a struggling business.

This is in line with the spirit of Resolution No 35/NQ-CP, which the Government issued last month on supporting and developing enterprises by 2020.

"Public opinion and other businesses will question why the Ministry of Finance favours a large business like Xuân Trường, and what lies behind this move," he told

As to the project of Xuan Truong, Doanh argued that many companies were operating in even tougher districts. He said business associations should raise their voices about the issue to prevent an unfair precedent that may lead to more "beg and give" circumstances in the future.

Another economist, Ngo Tri Long, emphasised with Phap luat Thanh pho Ho Chi Minh (Ho Chi Minh City Law) online that a fair and equal environment plays a vital role in a market economy. Without it, there will be big doubts inside the business community.

Xuan Truong Director Nguyen Van Truong is known as a tycoon from Ninh Binh, who chairs the Hoa Lu Tourism Joint Stock Company and directs Hoa Lu Hotel.

Xuan Truong is reportedly investing in several tourist sites in other northern provinces, including the VND15 trillion (US$666.7 million) Nui Coc Lake complex in Thai Nguyen, the VND10 trillion Cai Trap Island complex in Hai Phong, and the VND11 trillion Tam Chuc complex in Ha Nam. — VNS

Comments (2)

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Nguyễn minh Trực - Thursday, 31/03/2016, 09:23 Reply | Like