Tax case bounces rubber firm

15:08 | 26/02/2013
Local firm Saigon-Kymdan Rubber is facing a tax arrears collection case due to a related parties transaction with prices inappropriate with market rates.

A representative of Saigon-Kymdan Rubber said that the company received a document from the General Department of Taxation (GDT), saying that it owed corporate income tax (CIT) for the loan interest for its wholly-owned subsidiary Kymdan Australia, which is based in Australia.

According to Document 299/TCT-CS dated January 22, 2013, the GDT defined Saigon-Kymdan Rubber Company and Kymdan Australia as two related parties.

“Saigon-Kymdan Rubber lent Kymdan Australia with the interest rate of zero per cent. Saigon-Kymdan must adjust the interest rate for its loan in accordance with the normal transaction prices in the market, under the Ministry of Finance’s (MoF) Circular 66/2010/TT-BTC,” GDT deputy general director Cao Anh Tuan stated in the document.

The judgment is in accordance with the MoF’s Circular 130/2008/TT-BTC, effective from December 28, 2008 and Circular 123/2012/TT-BTC, effective from September 20, 2012.

“Saigon-Kymdan Rubber will have to pay tax for loan interest from the effective moment of these circulars,” said the firm’s representative, which meant that the tax authority would collect back tax from 2008 till now.

Saigon-Kymdan Rubber is considered a long-standing and famous brand in Vietnam for latex mattress.

However, the Saigon-Kymdan Rubber representative argued that in fact, the loan that the company lent Kymdan Australia was a method to support in term of finance because this member company asked for capital to expand store system.

Particularly in 2012, Saigon-Kymdan Rubber lent AUD2 million ($2.07 million) to Kymdan Australia without interest.

The representative said based on the interest rate at that moment, it was estimated that the company would pay CIT of VND110 million ($5,288) for 2012, with the CIT rate of 25 per cent.
She declined to provide details for the taxable revenue for the previous years.

Meanwhile, a tax supervisor in Ho Chi Minh City Department of Taxation said the Saigon-Kymdan case was an example of transfer pricing between two related parties.

Authorities have suspected transfer pricing issues are present in many foreign invested enterprises in Vietnam, especially multi-national companies with a large system of markets in the world.

Famous foreign names such as Adidas, Coca-Cola, PepsiCo, Keangnam Vina, and Metro Cash & Carry have been named by local tax authorities as suspected cases of possible transfer pricing violations in Vietnam.

By Nguyen Trang

vir.com.vn

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