"We are not powerless,' Vietnam official warns firms suspected of fraud

TN News

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Vietnam 's tax authorities are aware of possible fraud being committed by multinational corporations and will take strong action against attempts to use inter-company payments for tax evasion, an official said.

Tax officials are not helpless against violators, but it takes time to look deeper into suspected companies including Coca-Cola, Pepsi and Metro Cash & Carry, Nguyen Quang Tien from the General Department of Taxation told local media at a conference in Hanoi on December 11.

"The department knows about such cases but with its resources it has not been able to start an inspection immediately," he said. "A transfer pricing inspection could last one year or two or even longer. In Australia there was even a case that officials pursued for 13 years without success."

Tien, deputy head of a tax reform panel at the department, said transfer pricing is a practice often adopted by multinational companies in which they try to overstate costs to minimize tax payments in countries with high tax rates and shift profits to tax shelters.

"Many companies are under our watch but we need to keep the names confidential," he said, noting that they may have been assisted by auditing firms.

Several reports last week said beverage giant Coca-Cola is under suspicion of avoiding taxes in Vietnam. The beverage giant has reported losses every year since entering the Vietnamese market in 1994.

Coca-Cola Vietnam, however, insisted that it has not broken any laws, saying it had to spend more money for marketing and input costs.

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Local media also said wholesaler Metro Cash & Carry has not paid any corporate income taxes in Vietnam over the past 11 years even though it now has 19 outlets in the country.

Both companies have continued to increase their investment in Vietnam.

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