The State Audit recently said it has found signs the firm illegally inflated costs by VND2.68 trillion ($116.37 million) to evade taxes.
The possible fraud came to light during the audit of the 2019 budget accounts of southern Ba Ria – Vung Tau Province, where the company is located.
Global Vietnam Aluminum Ltd (GVA), a $250-million joint venture between Chinese-Australian entrepreneurs Jacky Cheung and Wang Tong, has been the subject of two major inquiries for tariff evasion and origin fraud in the last three years.
The total volume of aluminum involved on those occasions was around 2.3 million tons. According to auditors, GVA signed a five-year lease agreement with PTL Logistics, a warehousing firm incorporated in Ba Ria – Vung Tau, at an average rental of $7.2 per square meter per month.
This was five to seven times higher than what PTL Logistics paid to rent warehouse from others — $1-1.53 per square meter — the auditors found. PTL is 95 percent owned by Praise Trend Ltd, a Hong Kong company.
In this manner GVA has ostensibly paid VND2.68 trillion ($116.37 million) more than the market rate between 2015 and 2019.
The State Audit said: “This amount … reduces the taxable income of GVA or increases losses.” This is a criminal offence under the Law on Tax Administration, it said.
The State Audit said GVA and PTL were more than mere business partners who engaged in a simple warehouse leasing agreement, revealing that through a sale of stakes in PTL in 2017 GVA shifted VND338 billion ($14.51 million) abroad.
PTL was incorporated in 2015 with a charter capital of VND150 billion ($6.51 million), 80 percent owned by Praise Trend Ltd and 20 percent by Nguyen Tai, director of PTL Logistics.
In January 2017 Tai sold a 15 percent stake to Praise Trend, increasing its ownership to 95 percent.
The two parties also agreed retrospectively that Praise Trend would get a 95 percent share of the profits for 2015 and 2016, worth a combined VND338 billion.
Praise Trend Ltd repatriated this amount abroad. Cheung is the legal representative of Praise Trend in Vietnam and a director of GVA.
The State Audit said it suspects that the higher rents paid for the warehouse and the 15 percent stake sale in PTL were closely related and meant to illegally transfer money abroad from GVA.
Tai had claimed to have sold the 15 percent stake to Praise Trend for VND22.5 billion ($977,000) against its putative value of VND421 billion ($18.28 million).
The undervaluation meant he only paid a tax of VND400 million ($17,369) on the sale, the Tax Department said. He is liable to pay a further VND79.2 billion ($3.44 million), it added.
GVA was incorporated in August 2011 with a license to invest and build aluminium production facilities and export 200,000 tons a year.