Vietnam's tax authorities to take closer look at foreign retailers
May 25, 2017 | 07:26 AM GMT+7
With tax avoidance among multi-nationals a growing global concern, Vietnam is keen to know what retailers are up to.
foreign retailers compete fiercely in Vietnam. Photo: Internet
The General Department of Taxation has asked local tax authorities to inspect foreign retailers operating in Vietnam to see if they are transfer pricing or shifting profits to avoid tax.
Tax authorities will audit corporate, value added and personal income tax paid by these retailers between 2012 and 2016.
The department will also monitor the use of brand names in the form of franchising or ownership transfer among foreign retailers.
Transfer pricing is not illegal per se, but it is a gray area that tax agencies keep a close eye on. Abuse of the practice is often very difficult to prove, especially when it involves multinational corporations with a complex network of internal buyers and suppliers.
Vietnam’s retail market grew 10.2 percent last year with total sales reaching VND2,670 trillion ($117.6 billion), according to the General Statistics Office.
The country, recently ranked by A.T. Kearney among the world's top 30 retail markets with the best opportunities, has seen many foreign arrivials.
BigC supermarket chain, MM Mega Market (previously Metro Vietnam), electronics chain Nguyen Kim and Aeon Vietnam are several of the major foreign retailers operating in the country.
In 2015 retail giant Central, run by Thailand's third-richest family, the Chirathivats, made headlines with its $200 million purchase of a 49 percent stake in electronics retailer Nguyen Kim, via its subsidiary Power Buy. Then in 2016, Central and Nguyen Kim acquired Vietnam's biggest foreign-owned supermarket chain Big C.
Vietnam's tax authorities last year gave Big C Vietnam a tax bill of VND2 trillion ($88 million) for its capital gains tax obligations after its former French owner Casino Group sold its stake to Central for 1 billion euros ($1.14 billion).
In 2015, authorities also collected VND1.9 trillion ($85.6 million) in tax arrears from the $700-million acquisition of Metro Vietnam.
German-retailer Metro Cash & Carry, before being sold to Thailand’s TCC International Land, was accused of falsely reporting losses for 12 years in Vietnam and failing to pay tax bills worth $23 million, according to the General Department of Taxation.
Japan's Hulic Co. has entered a joint venture with Indochina Kajima to develop ready-built factory projects in Vietnam, as the country cements its position as a key manufacturing hub in Asia.
Menas has officially opened Mena Gourmet Market, a premium integrated supermarket located on the B1 floor of Menas Mall Saigon Airport, near Tan Son Nhat International Airport in Ho Chi Minh City.
V-GREEN and Prime Group have signed a memorandum of understanding to develop a network of charging stations for VinFast electric vehicles across Indonesia.
Menas Vietnam has signed a strategic memorandum of understanding with SVD-Group, marking a significant milestone in introducing premium Russian products to Vietnamese consumers.
Menas has recently signed a strategic partnership agreement with Ngoc Duy Group and Da Dream Farm to introduce high-quality agricultural products from Lam Dong province to the nationwide distribution network of Mena Gourmet Market.
