Tax & Revenue

Pay Taxes or face Closure, Thousands of Businesses warned

Date: 27 February 2018; Type: Tax News; Source: Vientiane Times

Vientiane authorities have warned 3,039 enterprises to pay taxes and declare their business plans, with the threat of closure hanging over them if they fail to comply.

The warning came after authorities found that these enterprises had not paid various taxes for more than a year. A number of them were no longer operating.

In a move to regulate the issue, the authorities have temporarily suspended the operation of these enterprises.

In a recent announcement, the Vientiane Tax Division warned businesses to pay taxes in line with the relevant laws, and to declare their business plans by April 30.

“If businesses fail to pay taxes and declare their business plan by the deadline, we will assume they have decided to cease their operations,” division Head Mr Khammone Bouaphanh told Vientiane Times yesterday.

Earlier, the division issued several warnings asking enterprises to comply with the law, but with no result.

“This is the last warning. If these enterprises still do not comply, authorities in charge will proceed to the next step in closing down their operations,” Mr Khammone said.

The warning was the outcome of a meeting between the division and the Vientiane departments in charge of issuing business licences and the management of enterprises.

Enterprises are required to pay taxes and inform officials of their intention to either stay in business or cease their operations.

The division and the Vientiane Industry and Commerce Department will remove the names of enterprises that express their intention to end their operations from the official list of enterprises and revoke their licences, the announcement said.

Mr Khammone said the offices of most of these enterprises were not traceable, even though their names had been registered and a business licence granted.

“Many of them exist only in name but do not actually operate,” he said.

There are currently more than 6,000 enterprises under the management of the Vientiane Administration, including the 3,039 referred to above.

This means the number of enterprises being warned account for half of the total.

There are an additional more than 2,000 enterprises under the management of the capital’s nine districts.

“The number of enterprises is high, but the revenue sourced from taxes is far below what it should be because many enterprises have a name only and do not actually exist,” Mr Khammone said.

Vientiane authorities are carrying out a survey to determine the actual number of enterprises and all forms of business in an effort to identify potential tax payers.

This is part of the government’s nationwide survey to identify all sources from which tax can be collected.

Officials expect the survey to turn up more entities that should be paying tax after reports emerged that a number of these had been hidden. The situation is set to repeat itself thanks to businesses that avoid paying tax and state officials who hide their true assets for the purposes of personal gain.

One such case emerged in August 2016 when a report suggested that tax officials presented an incorrect report to the Champassak provincial Governor, Dr Bounthong Divixay, stating there were only 235 stalls at Dao Heuang Market for the purposes of tax collection, when in fact the market had 515 stalls.

The real figure was revealed by the market's operators after a fire broke out at the market in June.

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