VEAM Hit with 18.4B VND Back-Tax, Stock Warning on Audit Issues

Overview

VEAM (VEA), listed on UPCoM, has been ordered by the Hanoi Tax Department to pay 18.4 billion VND in back taxes and late payment fees for under-declared corporate income tax in 2010. Separately, the stock remains under a warning status due to three consecutive years of qualified audit opinions, highlighting issues with inventory provisions, project costs, and unconfirmed receivables.

Key Facts

• Hanoi Tax Department ordered VEAM to pay 15.9 billion VND in back corporate income tax and 2.55 billion VND in late payment fees for tax year 2010.
• An additional 285 million VND in fines and back taxes was levied for failing to fully declare tax obligations on interest income from subsidiaries.
• VEAM’s stock is under warning on UPCoM due to three consecutive years of qualified audit opinions.
• Auditor flagged inventory provision issues: 101.8 billion VND in slow-moving inventory, with only 14.8 billion VND provisioned as of Dec 31, 2024; 81.1 billion VND of inventory not assessed for net realizable value.
• A 53.5 billion VND project cost for a medium tractor R&D project remains in construction-in-progress, with a court ruling requiring individuals to repay the company, but no adjustment or receivable recorded.
• Unconfirmed receivables and payables totaled 446.6 billion VND at Dec 31, 2025, with insufficient audit evidence for existence and recoverability.

What Happened

The Hanoi Tax Department issued a decision requiring VEAM to remedy tax underpayments from 2010, totaling 18.4 billion VND including late payment fees. The violation is beyond the statute of limitations for administrative fines, so only the tax and late fees are collected. Separately, VEAM was fined and charged 285 million VND for failing to fully declare tax on interest income from subsidiaries.

On the audit front, VEAM’s 2025 financial statements received a qualified opinion for the third consecutive year. The auditor cited insufficient evidence to assess inventory provisions, specifically 101.8 billion VND in slow-moving inventory, of which only 14.8 billion VND was provisioned. Additionally, a 53.5 billion VND project cost for a tractor R&D project was not adjusted despite a court ruling requiring individuals to reimburse the company. Unconfirmed receivables and payables of 446.6 billion VND also lacked sufficient audit evidence.

Market Context

VEA shares closed at 34,500 VND on June 10, 2026, unchanged from the previous session, with low volume of 108,100 shares. The stock has been under warning status on UPCoM due to the recurring audit issues, which may deter investor confidence and limit liquidity. The industrial machinery sector in Vietnam faces headwinds from slow inventory turnover and regulatory scrutiny.

Strategic Significance

The back-tax and audit issues underscore governance and financial reporting risks at VEAM. The qualified opinions highlight potential overstatement of assets and understatement of liabilities, particularly in inventory and receivables. The unresolved project cost and unconfirmed receivables suggest weak internal controls. For long-term investors, these issues could lead to further regulatory actions or asset write-downs, affecting net asset value and earnings quality.

What to Watch

• VEAM’s progress in resolving the inventory provision and receivable confirmation issues in upcoming quarterly reports.
• Any legal developments regarding the 53.5 billion VND project cost and recovery from individuals.
• Potential delisting or continued warning status if audit opinions remain qualified.
• VEAM’s ability to improve internal controls and financial reporting transparency.
• Impact of the back-tax payment on cash flow and dividend policy.