VietNamNet Bridge – The taxation agencies would gather their
strength to fight against the transfer pricing and would go their ways to find
out the truth, though it is really a very complicated and hard work.
Metro Cash & Carry, Coca Cola
and some other foreign invested giants have been put under the probe by the
taxation agencies which have doubts that the giants have made transferred
pricing to evade corporate income tax.
It seems that Vietnam has prepared
a methodical attack campaign targeting the foreign invested enterprises FIEs,
in which the fraudulent enterprises would be attached from all rounds. In
principle, press agencies would not be informed anything about the operation of
enterprises until wrongdoings are discovered. However, Vietnam goes another way
this time. Finance officials appear on local newspapers continuously these
days, affirming that all the shady deeds would be brought to life.
Nguyen Quang Tien, Deputy Head of
the Tax Reform Division of the General Department of Taxation, has affirmed
that the taxation bodies would inspect all the enterprises suspected of
conducting transfer pricing. Though admitting that it would be very difficult
to find the proofs to accuse enterprises, this does not mean that the taxation
bodies would “give up the games” and let the enterprises continue committing
trade frauds.
Regarding the case of Coca Cola,
Tien said it is difficult to prove that the drink manufacturer declared wrong
import material prices to evade tax, because there is no information about the
prices of the similar materials for taxation bodies to compare with to find out
if the prices declared by Coca Cola Vietnam are higher than the normal levels.
The problem is that the materials have been provided only by the parent group.
However, TIen said that taxation
bodies would use another method to find the truth – comparing the profits and
detaching profits.
Coca Cola Vietnam has repeatedly
declared a loss over the last 20 years, since the day it set foot on Vietnam,
which means that the drink manufacturer has not paid any dong in corporate
income tax during that time.
Surprisingly, despite the big
loss, it has been continuously expanding business in Vietnam. The finance books
of the manufacturer showed that its losses were too big, which led to the loss
of capital and forced Coca Cola Vietnam to borrow capital from the parent group
to making investment in other projects in Vietnam.
When asked if Vietnamese taxation
agencies are capable enough to fight against the transfer pricing, Tien said
that taxation agencies alone would not be able to fulfill the task, but they
would be supported by the Ministry of Planning and Investment and auditing
firms.
Especially, the strong
determination of the taxation agencies has been encouraged by Vietnamese
people, who say that Vietnam needs to take actions to ensure its legal right of
imposing taxation on the enterprises that do business and make profits on the
Vietnamese territory.
An executive of an auditing firm
belonging to the Big Four group said he does not think that the big auditors
like KPMG, E&Y, Deloitte would provide any negative information about their
clients. Therefore, Vietnam would meet big difficulties if it follows normal
ways to fight against the foreign giants.
The executive said that mass
media and consumers could act as the supporters to the taxation agencies in the
fight against the transfer pricing.
Tran Trung Kien, a partner lawyer
of S&B Law firm, said on Nguoi lao dong that in some other countries, the
local authorities call on consumers to boycott the products made by the
enterprises alleged of conducting transfer pricing.
The executive from the auditing
firm agreed, citing that the same method was applied successfully with
Starbucks in the UK. The giant then had to apologize to the public and promised
to pay 32 million dollars worth of tax in 2013 and 2014, no matter if it can
make profit with its business in the two years.
Compiled by C. V
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