Zero-VND tour operators pay minimal tax despite high sales

The Taxation Department in the northern province of Quang Ninh found that 32 retail shops belonging to zero-dong tours paid a mere VND1.5 billion in taxes in 2017, a modest tax contribution compared to their high volume of sales, Nguoi Lao Dong Online reported.

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Tourists enter Vietnam through Mong Cai international border gate in Quang Ninh Province in this file photo. Some 400,000 tourists taking zero-dong tours visit the country through the border gate every year, according to Quang Ninh’s Department of Tourism – PHOTO: VGP

Data from the provincial Department of Tourism showed that around 400,000 tourists opting for zero-dong tours enter Mong Cai international border gate in the province every year. As such, the tour operators have earned more than VND1.2 trillion in total, with each tourist spending at least VND3 million for a three-night-four-day tour.

As of 2018, taxes collected from these shops amounted to over VND11 billion, as local authorities took concrete measures in tax collection. However, according to taxmen, the figure still remains low compared to the high volume of sales generated by shops that solely serve tourists using zero-dong tours.

They offer free tours to lure more tourists by providing free airfares and accommodation, but then earn huge profits by pressuring tourists to opt for dining, sightseeing, and shopping activities while on tour. Of these, shopping services enable budget tour operators to generate high sales.

The Taxation Department’s statistics uncovered that 14 shopping sites under zero-dong tours in the province’s Ha Long City reported over VND50 billion in revenue and paid over VND1.3 billion in taxes as of 2017, while 18 shopping sites in Mong Cai City earned over VND12 billion in revenue, with their tax contribution exceeding VND250 million.

Last year, taxmen collected over VND10.5 billion from Ha Long City’s 14 zero-dong tour shops, whose sales exceeded VND170 billion, and collected more than VND630 million from 18 shops in Mong Cai.

Many representatives from travel firms in the province said that Mong Cai-based budget tour shops generated high sales, equivalent to those in Ha Long City, or even higher, since tourists first arrive at Mong Cai while visiting Vietnam. Meanwhile, taxmen managed to collect higher taxes from Ha Long-based shops thanks to the strong measures taken by Ha Long’s tax collection authorities.

Also, these free tours ruin the tourism image of local destinations. Some Chinese tour guides usually lure tourists to buy fake or low-quality products at exorbitant prices available at the zero-dong shops.

These products are then shipped to the houses of tourists in China, prompting them to believe that the sellers offered home delivery. In fact, such products were made in China, said Trong Hoang, a local zero-dong tour guide. The shops were all operated by the Chinese and showed signs of tax evasion, Hoang added.