FDI firms’ transfer pricing remain out of control in Vietnam – News – Investment

The Hanoitimes – A recent inspection conducted by the Government Inspector found that foreign direct investment (FDI) companies in Vietnam have continued reporting losses while expanding operations.

The phenomenon seems to show that their transfer pricing activities are devious, causing the state budget losses over the recent years.

The Government Inspector also performed tax audits o­n various enterprises in Hanoi, HCM City, Binh Duong and Dong Nai, and uncovered many FDI firms which have continued reporting losses.

The check o­n 399 companies at export processing zones in these localities showed that 125 firms have reported losses for the three consecutive years between 2009 and 2011.

Japanese-invested Sumitomo Bakelite Vietnam Ltd. Co. at Thang Long Industrial Park in Hanoi announced an accumulated loss of VND777 billion (USD37 million) during the period. Meiko Electronics Vietnam Ldt. Co’s loss was reported at VND300 billion (USD14.2 million) during the same period of time.

In Dong Nai Province, FDI companes with the big loss include Toshiba Industrial Products Asia Co. with VND430 billion (USD20.4 million), followed by Fujitsu Vietnam with VND292 billion (USD13.9 million), Kureha Vietnam with VND264 billion (USD12.57 million) and Olympus Vietnam with VND256 billion (USD12.19 million).

Freetrend Industrial Vietnam Ltd. Co. in HCM City reported a loss of VND222 billion (USD111 million) and Saigon Stec Ltd. Co. in Binh Duong Province with VND218 billion (USD10.3 million).

However, despite these claimed losses, a number of them continued to expand. This has raised the public concerns over the transparency of transfer pricing.

An official from the Hanoi Taxation Department said these signs indicate the methods used by FDI companies in transfer pricing. They have transfer their profits to the parent companies in a foreign country, he said.

Phan Huu Thang, Former Head of the Foreign Investment Agency, said if tax agencies paid more attention to FDI companies’ revenues and taxable income, it would help the ability to assess whether they are being honest or not.

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