Million-dollar transfer puts Metro Vietnam under tax scrutiny

By Anh Vu, Thanh Nien News

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Shoppers outside Metro hypermarket in Ho Chi Minh City. Photo: Diep Duc Minh Shoppers outside Metro hypermarket in Ho Chi Minh City. Photo: Diep Duc Minh

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Vietnam plans to audit German retail giant Metro after the latter announced the sale of its hypermarkets here to Thailand’s Berli Jucker (BJC) for US$876 million.
Bui Van Nam, director of the General Tax Department, told Thanh Nien on Thursday that the department creates annual lists of businesses to audit based on signs of risk.
Metro Cash & Carry Vietnam did not pay any corporate tax for 12 of the 13 years it operated in Vietnam, citing losses.
But Nam said another thing that made Europe’s fourth-biggest retailer a target were media reports about its million-dollar transfer.
An upcoming investigation will determine how much tax the company must pay on the transfer, he said.
But as a foreign investor, Metro would be subject to at least 22 percent tax on the transfer, he said.
In August, Reuters cited a statement issued by Metro’s Ho Chi Minh City office as saying it has agreed to sell its hypermarkets in Vietnam to BJC for $876 million.
“BJC will take over the complete operational business of Metro Cash & Carry Vietnam including all 19 wholesale stores and the related real estate portfolio for an enterprise value of 655 million euros,” according to a release issued by BJC.
Officials from the HCMC Department of Investment and Planning and Tax Department told news website Thoi Bao Kinh Te Saigon (Saigon Times) that they hadn’t received any notice of the sale and only learned of it through reports in the media.
Vietnamese law requires a business transfer to be taxed if it generates income for the seller.
Metro opened its first cash-and-carry store in Vietnam in 2002 and has since opened 19 such stores across the country that employ some 3,600 people, making Vietnam its second-largest market in Asia after China.
Financial reports from Metro claim its revenues jumped from 38 million euros in 2002 to 516 million euros last year.
But a report authored by the General Taxation Department and released in 2013 showed that the retailer had repeatedly declared losses of up to $7.5 million a year in Vietnam and was therefore exempt from taxes.
Reuters cited sources familiar with the BJC transfer as predicting it would raise Metro’s earnings before interest and tax (EBIT) by around 400 million euros ($525 million) in the 2014/15 fiscal year.
Bloomberg published a similar estimation. 

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