Bottles of beer move along a production line at a Sabeco factory in Hanoi. Photo: Reuters
The state audit office has ordered the country's largest brewer, Sabeco, to pay VND408 billion (US$18.68 million) in luxury tax it allegedly owes from 2013, Tuoi Tre newspaper reported Monday.
It has accused Saigon Beer Alcohol Beverage JSC, producer of the popular Saigon Beer, of rigging prices within its system of 11 distributors to pay less tax.
Luxury tax is calculated on the price at which a producer sells products to distributors, and this must be at least 90 percent of the price at which the distributors then sell. The tax was 50 percent for beer in 2013.
Sabeco paid the tax based on the price it set for Sabeco Trading Co. Ltd, which it fully owns, the audit office said in its report to the Ministry of Finance.
The distributor then sold beer to 10 "regional" distributors in each of which Sabeco owns a 90-94 percent stake, it said.
This allowed Sabeco to set low prices and pay less taxes, an unnamed finance ministry official was quoted as saying by the newspaper.
In its report, the audit office recommended that the ministry should order Sabeco to pay taxes on the price at which its regional distributors sell to retailers.
If this is accepted, the brewer would have to pay a total of VND4 trillion ($183.23) for 2008-14, Tuoi Tre reported.
But the audit office asked the company to pay its 2013 debts first, saying since the total amount is huge, Sabeco would need time to pay up.
In response to the state audit office's charges, Sabeco has "continuously" filed complaints with relevant ministries, claiming it did not violate any rules, the newspaper reported.
The proposal to change the method of calculating tax, if approved, would change the company's financial indexes like profits, affecting employees' salaries, it warned.
Moreover, the company's profits since 2008 have already paid out as dividends to shareholders, and so it would be difficult to pay the so-called debts, it said.
It offered instead to pay VND58 billion ($2.65 million) in back personal and corporate taxes.
Sabeco made an initial public offering (IPO) in January 2008, after which the state holds an 89 percent stake. Earlier this year the Ministry of Industry and Trade called for allowing the company to sell more shares and bring down state ownership to 36 percent.
In May the company said its net profit this year would rise 8 percent to VND3.29 trillion ($151 million) due to higher output and lower production costs.
Sabeco pointed out that many other large companies like Hanoi Beer Alcohol and Beverage Joint Stock Corp. and Vietnam National Tobacco Corporation have similar distribution systems.
This was confirmed by Pham Dinh Thi, chief of the ministry's Department of Tax Policies.
The ministry is drafting a new decree that is expected to help stop pricing manipulation following recent proposals by state inspectors and the state audit, he told Tuoi Tre.