Firm caught red handed

Sanyo Ha Asean (SHA), which produces washing machine, refrigerators and air-conditioners, was said by Dong Nai province’s Customs Agency to have to pay VND7.2 billion ($360,000) in tax in arrears for its air-conditioner component packages imported from March to July, last year. So far, SHA has yet to pay back this sum.

The firm, which was unavailable for comment when contacted by VIR, was reported by the agency to have another electrics firm, namely Gree Vietnam, disassemble completely-built air-conditioners into separate components outside Vietnam and then import them into the country via Binh Duong and Dong Nai customs offices. Gree Vietnam then resold the components to SHA.

A Dong Nai Customs Agency official explained to VIR that separated components were subject to much lower import tax rates than completely-built units.

This is not the first time SHA has reportedly resorted to trade fraud. Between 2007-2008, this firm was discovered to have incorrectly declared tax codes for its sets of imported air-conditioner components.
Specifically, the firm must imported sets of components into Vietnam and then reassembled them into completely-built air-conditioners. However, it disassembled the sets into separated components and then imported into Vietnam via Dong Nai’s customs office in different points of time. However, the firm’s actions were detected and it was forced to pay tax in arrears worth total VND66.9 billion ($3.345 million). SHA already paid the sum.

The Ministry of Finance said the firm had not yet fully understood Vietnamese law.  However, the customs official said: “It is the firm’s importing separate components into Vietnam to enjoy low tax rates that has reflected a fact that the firm has studied the country’s tax law very carefully.”
He said the firm should be imposed a heavy penalty.

He added that there had been some other cases similar to SHA’s in Dong Nai. All were foreign invested enterprises.

An industry insider told VIR: “The firm’s action is definitely wrong. When doing business, one should follow the market’s regulations, even if the regulations are tough. Doing business also means that we have to pay taxes. Why did the company try to violate the regulations? The answer is that such trade frauds can bring more profits.”