CÁCH NÀO BỊT LỖ HỔNG TỪ CÔNG TY 'MA' CHUYÊN MUA BÁN HÓA ĐƠN? / WHAT MEASURES TO COVER LOOPHOLES WHER

There are individuals who either establish themselves or hire others to set up hundreds of so-called “shell company”. Notably, these enterprises are established for the purpose of engaging in illegal activities such as the illicit trading of invoices, fraud, tax evasion, etc.

So what measures to cover loopholes exploited by “shell companies”?

Hiring people to establish hundreds of “shell companies”

Between November 2020 and December 2023, upon noticing that many businesses had a demand for the illegal purchase and sale of Value Added Tax (VAT), Mr. Nguyen Khac Dien (45 years old, residing in Ho Chi Minh city) formed the intent to engage in illegal activities. He hired numerous individuals to establish 154 companies, with the cost for enterprise registration, digital signature certificates, e-invoice services, bank account opening, and company seals amounting to 30 million VND/company, equivalent to a total of 4,62 billion VND.

After setting up these 154 enterprises, Mr. Dien assigned Mr. Tran That Tha, his subordinate, to manage and organize the illegal issuance and sale of VAT invoices.

To operate this illicit invoice-trading network, the group rented an apartment in Ho Chi Minh City (HCMC) to use as an operation office, and hired additional staff to assist with related tasks. In parallel with issuing and selling invoices, the network also established a system of intermediary “agents” to distribute invoices and goods, maintaining connections via social media platforms such as Zalo and Facebook.

This investigation revealed that this network issued and sold a total of 71.678 VAT invoices; with a pre-tax turnover stated on the invoices exceeding 8.300 billion VND; VAT amounts stated of over 764 billion VND. Mr. Dien personally profited by more than 67 billion VND.

Using similar methods, another large-scale criminal network was led by Mr. Le Minh Chau (residing HCMC, deceased).

Similarly, Mr. Chau registered to establish and manage in general, organized the operation of 106 companies, and rented a house located in the old Tan Phu district (HCMC) to serve as an office for carrying out the illegal act of issuing and purchasing invoices.

With the support of many subordinates and groups mentioned above, his companies had illegally issued a total of 62.117 VAT invoices; with a pre-tax turnover exceeding 13.331 billion VND; VAT amounts stated for over 1.244 billion VND.

39 individuals and 8 commercial entities related to the case where invoices are illegally purchased and sold, as long as tax evasion mentioned above, have been prosecuted and sentenced with different penalties by the Da Nang People’s Court. 

How to cover the loopholes?

Lawyer Tran Hau – Lawyer Bar Association of Da Nang city – remarked that the establishment of enterprises without any actual business or production activities, using such enterprises merely as a front to commit illegal acts, cause serve consequences for a healthy and fair business environment.

If enterprises are established solely for the purpose of issuing fictitious invoices, trading invoices, using legal entities to manipulate the market, trafficking counterfeit goods, or engaging in other forms of commercial fraud, it will result in market distortion, tax revenue losses for the State, and harm to consumers who suffer damages to their property and health due to counterfeit or substandard products. “Recently, enterprises are easily established in Vietnam, only a few steps are needed for registration, and the entire process is handled through the National Business Registration Portal, with administrative procedures increasingly implified to encourage people to participate in business activities.

Therefore, it is easy for subjects with illegal acts of taking advantage of establishing “shell companies”. By using people’s identification documents to register as legal representatives, falsely declaring capital contributions, registering fictitious addresses, and providing untruthful information, “shell companies” are easy to create and to disrupt the market” – Lawyer Hau shared.

Also according to lawyer Tran Hau, the simplification of administrative procedures for business registration is an appropriate policy, as encouraging people to participate in the market and engage in business activities is highly necessary. However, the existence of such “shell companies” often results from weaknesses in post-registration inspections and shortcomings in the management and supervision of corporate operations.

Commercial fraud activities are linked to the management responsibilities of the industry and trade authorities, while the issuance of fake or fictitious invoices is directly related to tax administration.

Therefore, if we open the door for easy enterprise registration, there must be effective solutions for post-registration monitoring of these companies.

If the enterprise continues to be set up, but the mechanisms for supervising business activities and tax compliance are effectively enforced in practice, there will be no room for “shell” companies of other fraudulent commercial acts to survive.

If controls are in place and dishonest practices are prevented, “shell” companies will naturally disappear from the market themselves.

“We believe that the practical management of post-registration inspections, supervision, and detection of violations is crucial to ensuring that newly established enterprises comply with the law and do not dare to engage in wrongdoing. In recent times, a series of strict actions have been taken against commercial fraud, and strong, fair enforcement of sanctions in practice will help cleanse the market, leaving no safe haven for “shell” companies to operate” – Lawyer Hau stated.

Indicted for purchasing invoices from “shell” companies

At the end of May, the Economic Police Division (Provincial Police Department of old Quang Binh) dismantled a network engaged in the illegal trading of invoices at several companies operating in the labor leasing sector across multiple provinces and cities nationwide. The Police initiated criminal proceedings, issued search warrants for residences and workplaces, and arrested Nguyen Nhu Thanh and Le The Hai (capital-contributing member and director of Win Group Manpower Supply Co., Ltd); Le Quang Hai (owner of IQ Group Joint Stock Company, also headquartered in Yen Bai province) on charges of illegal trading of invoices.

Preliminary investigation revealed that, from 2022 to 2024, the accountants of these companies conlluded with the aforementioned suspects and other related individuals to illegally purchase 621 VAT invoices issued by “shell companies” based in HCMC and southern provinces. The total value of fictitious goods recorded on these invoices amounted to nearly 350 billion VND.

The police are continuing to expand the investigation to strictly handle all individuals involved and to recover State assets lost due to the illegal trading of fake invoices.

Previously, the Police of Da Nang had prosecuted, and detained a female company director for investigation on charges of printing, issuing, and illegally trading invoices, as well as tax evasion. This individual had hired acquaintances to establish multiple “shell” companies to illegally issue VAT invoices.