Unveiling the Illicit Invoice Scheme: A Damaging 743 Billion Dong Scandal

Director Instructs Employees to Violate Regulations

The Investigation Police Agency under the Ministry of Public Security has just issued investigation conclusions on a case of “Violation of bidding regulations causing serious consequences; Illegal printing, issuance, and trading of invoices and financial documents for state budget collection”, involving Tan Thanh Company Limited, Danh Medical Equipment Company Limited, Trang Thi Medical Equipment Company Limited, and related units.

At the same time, the case file has been transferred to the Supreme People’s Procuracy, recommending the prosecution of 38 defendants. Among them, Nguyen Dang Tuyet (DOB: 1970, General Director of Thanh An Company), Nguyen Nhat Linh (DOB: 1986, Deputy General Director and Tuyet’s wife), Nguyen Quy Khai (DOB: 1986, Director of Doanh Medical Equipment Company), Bui Thi Mai Huong (Chief Accountant of Doanh Medical Equipment Company), Do Thi Hoa (former Chief Accountant of Thanh An Hanoi Company), and Nguyen Thi Hoa (Accounting Supervisor of Thanh An Hanoi Company) are charged with “Violation of accounting regulations causing serious consequences”.

In the same case, 32 other defendants, who are shop employees and private business owners, are recommended to be prosecuted for “Illegal printing, issuance, and trading of invoices and financial documents for state budget collection”.

According to the investigation conclusions, Thanh An Company was established by Nguyen Dang Tuyet in 2001, operating in the field of importing and distributing medical consumables and equipment. In 2011, Tuyet established Danh Company and later Trang Thi Company, both engaged in the business of medical supplies and bidding to supply hospitals and medical facilities nationwide.

After establishing the above three companies, Tuyet directly managed and instructed accounting employees to set up two financial accounting books to monitor actual data (revenue and actual expenses) and data that did not reflect reality (recording increased input costs) for declaration and reporting to tax authorities.

Causing a loss of over 743 billion VND in tax revenue to the state budget

Specifically, the investigation conclusions determined that from 2017 to 2022, Nguyen Dang Tuyet, together with his wife, Nguyen Nhat Linh, instructed Do Thi Hoa, Nguyen Thi Hoa, Bui Thi Mai Huong, and Nguyen Quy Khai to establish and use two accounting books, falsify data in reports to tax authorities, sign fictitious purchase contracts, and buy input invoices from companies/business households to increase expenses, thereby reducing taxes payable to the state.

The act of establishing and using two accounting books by Thanh An Company, Danh Company, and Trang Thi Company resulted in a total tax loss of over 743 billion VND to the state budget (including over 62 billion VND in VAT and over 680 billion VND in corporate income tax).

In this case, Mr. Nguyen Dang Tuyet is assessed as the mastermind and leader, bearing primary responsibility for the violations of the Thanh An group of companies.

Defendant Nguyen Thi Hoa, the accounting supervisor of the three companies, was in charge of making plans for the estimated tax amount for the year, which were unreal figures. These figures were used to record increased input costs from the purchase of fictitious invoices to reduce taxable income.

Meanwhile, Bui Thi Mai Huong and Nguyen Thi Hoa were entrusted by Tuyet to manage digital signatures (tokens) for tax reporting and issuing electronic invoices. After preparing tax and financial reports, the group’s leaders would approve them, and subordinates would use digital signatures to submit them to tax authorities.

To legalize their actions, the defendants bought fictitious invoices from 32 sources and shared the benefits.

According to the investigation, this ring purchased 19,167 fictitious invoices (for medical supplies) from 110 companies/business households, with a total pre-tax value of 3,689 billion VND and VAT of over 75 billion VND. The cost of buying these invoices was 257 billion VND.

The 19,167 fictitious invoices (without actual goods) purchased from 110 companies/business households were entered into the tax accounting software (tax accounting system) by the defendants to increase expenses and reduce taxable income. Meanwhile, the cost of buying fictitious invoices and other actual revenues and expenses were monitored by Do Thi Hoa using internal accounting software.

An investigation into the business results of the three companies during 2017-2022 showed total assets and capital sources of over 8,542 billion VND, total pre-tax profits of 562 billion VND, and post-tax profits of 448 billion VND.

However, according to data extracted from the internal FAST software of Thanh An, Danh, and Trang Thi companies, their total assets and capital sources were over 12,828 billion VND, total pre-tax profits were 2,655 billion VND, and total post-tax profits were 2,563 billion VND.

Thus, there was a discrepancy between the public and internal books, with total assets and capital sources increasing by 4,286 billion VND and pre-tax profits increasing by 2,092 billion VND.

During the investigation, the Hanoi Tax Department’s appraiser concluded that, in terms of value-added tax, Thanh An, Danh, and Trang Thi companies had used 19,167 fictitious invoices to declare and deduct input VAT, leading to a reduction in payable tax and causing losses to the state budget.

Regarding corporate income tax, the above three companies’ use of fictitious invoices purchased from companies and business households for accounting and financial reporting to determine taxable income resulted in a reduction of taxable income.

During the investigation, the group of defendants paid more than 93 billion VND to remedy the consequences of the case.

Currently, the police have seized 18 real estates and frozen several bank accounts of the subjects with a total balance of over 2.3 billion VND to ensure the enforcement of the judgment.