16:07 | 09/01/2018 Industry
The Ministry of Finance (MoF) is demanding more than 1.9 trillion VND (US$85 million) in tax arrears from the Electricity of Vietnam (EVN) after uncovering that the group had failed to declare its costs accurately.
|EVN to pay tax arrears of 1.9 trillion VND - Photo VNA|
The finance ministry asked the EVN to pay to the State budget 88.2 billion VND worth of corporate income tax and 877.46 billion VND worth of post-tax profit for 2015.
The tax arrears for 2015 were due to the EVN listing a 1.34 trillion VND 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.
The EVN was also asked to make an additional payment of 969.56 billion VND 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 4.8 trillion VND thanks to foreign exchange rate differences, which the 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 the EVN’s expenses in the years after 2016.
The Prime Minister approved the proposal and required the EVN to divide the costs into two years of 2016-17. However, the group allocated the costs in 2015 and 2016, reducing its profits by 1.34 trillion VND.
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 sent a press release to media about the issue.
The EVN said it allocated more than 1 trillion VND into costs in 2015 instead of 2017. The foreign exchange difference profit of 4.87 trillion VND 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, the EVN must continue to be the project’s investor. After it completes the construction, it could transfer management to Genco 1.
The EVN said it reported the situation to MoIT. The ministry in 2013 allowed the EVN to be the investor of the project.
The group 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 Sơn 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.
The EVN is continuing to communicate with the Finance Ministry to resolve the issue.
“The EVN will strictly follow the decision of the PM and MoF,” the firm added.
On December 1 2017, the group raised retail power prices by 6 percent to 1,720 VND (7.6 US cents) per kWh from the 1,622 VND (7.1 cents) per kWh.