Pho 24 is one of famous brand names of Vietnamese pho noodles. — Photo dioconline.vn

HA NOI (BizHub) — The HCM City Tax Department will investigate the food chain Pho 24 and Hoan My Medical Company further to look for any signs of capital transfer and tax evasion.

According to local media, the department's officials on January 9 said at a conference on implementing tasks of budget collection in 2014 that they had investigated the two cases for a couple of weeks but there were no conclusions yet.

Earlier, the city's People's Committee discovered that capital transfers which generate profits had not been listed for tax agencies, such as in the case of Pho 24 Commerce and Service Joint Stock Company.

It's reported that the Pho 24 brand was transferred to Viet Thai International Joint Stock Company at a price of US$20 million, while its first investment capital was only VND1 billion ($47,600). After that, Viet Thai sold 50 per cent of its shares in Pho 24 to Jollibee, the largest fast food chain in the Philippines, for $25 million.

However, after investigation by the HCM City Department of Tax, the company registered to change the name of its legal representative, while the names of its members and the rate of capital contribution remained the same.

According to Vietnamnet online newspaper, the Hoan My Medical Company was found trying to evade paying tax by declaring a change in the name of the company's representative, instead of reporting the capital transfer deal.

Tax officers found that Hoan My completed a capital transfer deal which brought a profit of VND157 billion (US$7.47 million) (the selling price is VND776 billion while the cost price is VND618 billion), meaning that it had to pay VND39 billion ($1.85 million) as tax.

However, if the capital transfer deal is considered as a normal stake transaction in the stock market, Hoan My, or the seller, can choose either to pay 0.1 per cent of the selling price or 20 per cent of the profit.

If it chooses the former, or 0.1 per cent of the turnover, it has to pay only VND780 million as tax, not VND39 billion.

This is the reason why businesses think taxation on capital transfer deals is "unreasonable" and why they try every possible means to evade paying tax.

It may happen that businesses list their shares on the bourse before they transfer capital. In that case, as listed companies, they have to pay only 0.1 per cent of the turnover and can legally reduce the tax amount they need to pay.

At the conference, the department said that it had inspected 33 businesses and recovered VND 81.79 billion($3.89million) in 2013.— VNS