Establishing “bogus” companies for invoice trading

The Investigation Police Department of HCM City Police has opened a criminal case and are investigating five suspects in large-scale illegal invoice trading with the value of illegal invoice of thousands of billions of VND. These suspects were prosecuted for illegal invoice printing, issuing and trading” and “illegal invoice trading”.

The Economic Police Department of the HCM City Police inspected nine places in HCM City, Binh Duong and Dong Nai, and seized 70 seals of enterprises and a large volume of illegal invoices and documents.

The suspects said that from 2018, they have used the identity card of their relatives and bought the identity cards at pawn shops to establish 49 bogus companies in HCM City and 10 companies in Dong Nai.

The suspects have found customers and offered VAT invoices, and issued illegal invoices with an agreed-upon price of 1.5%-2% of the invoice value before tax.

The initial investigation showed that companies issued over 20,000 invoices to about 4,000 different companies in 35 provinces and cities. HCM City police expands investigation and prosecutes invoice brokers for "illegal invoice trading”.

On May 2, Director of a company in District 12, HCM City was prosecuted by the Long Xuyen City Police (An Giang province) for the same crime. The director was hired with a salary of VND12 million/month and was asked to sign 27 illegal value-added invoices for a business to evade more than VND3.7 billion of tax.

On April 28, Police of Lai Chau province tackled a ring of illegal invoice trading and issued illegally invoice for 20 companies with the goods value of VND700 billion. In April, the Police of Bac Giang province prosecuted two suspects Tran Nhu Trung, 43 and Hoang Quoc Trung, 44, for illegal invoice trading.

These are two of six suspects involved in the illegal invoice trading in Bac Giang province, worth thousands of billions of VND. The sophisticated tricks of the illegal inter-provincial invoice trading ring were detected. A series of illegal invoice trading cases have been discovered.

The documents and invoices in a large-scale invoice trading ring detected by HCM City Police. Photo: provided by HCM City Police.

Making great efforts in anti-fraud

Director of Viet A Tax-Accounting-Law Co. Ltd, Vice Chairman of Dong Nai Import-Export Association, said many units and businesses used VAT invoices as payment and methods in all fields, especially tax finalization and settlement of expenses.

The greater the demand for using e-invoices, the more complicated problems will arise. Criminal groups abused this demand to illegally trade e-invoice. In addition, the management of e-invoices is more complicated than the paper-invoice management when the management among enforcement authorities have not been comprehensive, thereby causing illegal invoice trading.

To prevent this situation, on April 24, the General Department of Taxation launched the Database Center on e-invoices. The center will automatically check between the arising tax declaration and the issued e-invoice number.

The Tax authority will monthly assess the data such as e-invoices to see the surge or plunge. The Tax authority will transfer to the investigation agencies when detecting frauds.

HCM City Tax Department has recommended taxpayers for violations in using e-invoices. Dong Nai Tax Department has requested taxpayers to check the content in e-invoices and the actual goods and services of the sellers to protect their legitimate interests and avoid risks when using illegal invoices.

Tax Branch of Di An city (Binh Duong province) has notified local businesses, organizations, households and individuals that if they use e-invoices issued by 52 companies involved in illegally invoice printing and trading implemented by Mr. Dang Hoang My, they will not be allowed to account for input expenses and deduct VAT.

Nguyen Tien Dung, Deputy Director of HCM City Tax Department, said that to prevent fraud and the illegal use of e-invoices, the tax authority has implemented many specific solutions.

The Tax has implemented a database analysis and e-invoice management system with data analysis functions (checking between the e-invoice data and tax declarations, assessing the data on purchase and sale invoices), serving as risk management of e-invoices in the whole tax sector, promoting the application of big data analysis and artificial intelligence for tax administration and e-invoice management to control and quickly fraud in using invoices by taxpayers.

The Tax has coordinated with other enforcement agencies to strictly handle organizations and individuals using illegal invoices to legalize illegal goods and amount of tax payable to evade taxes.

At the same time, tax authorities at all levels would focus on reviewing and analyzing to promptly detect risks in the use of e-invoices, preventing and handling violations on invoices and documents as well as creating transparency, equality, and improving the business investment environment.

The General Department of Taxation has upgraded and installed 557 application and database servers, including 471 database servers and 86 86 application servers; 52 network devices, eight security devices, 1 data backup system at the main data center and the backup data center.

The Tax sector has detected and prevented 600 thousand foreign connections attacking the system and about 160,000 denial-of-Service attacks.