Photo: Duc Anh
Deputy Prime Minister Trinh Dinh Dung makes statement at meeting with Executive Vice President of Coca-Cola Company.
Deputy Prime Minister Trinh Dinh Dung acknowledged that Coca-Cola Vietnam was tax compliant in a meeting with Mr. Irial Finan, Executive Vice President of the Coca-Cola Company and President of the Bottling Investments Group (BIG), during their meeting on June 22.
The Vietnamese Government, Mr. Dung stressed, is determined that all enterprises meet their tax obligations, protect the environment, and contribute to local communities, according to the government’s news portal.
The government is also making great efforts to improve the investment environment and develop policies to assist domestic and foreign businesses in accessing business resources equally and transparently.
Mr. Finan confirmed that Coca-Cola wants to comply with environment protection rules, be transparent in its tax affairs, and conduct corporate social responsibility activities in Vietnam.
In a report sent to Ho Chi Minh City authorities in October 2015, the company said its profit in 2014 was $16.6 million, double the $7 million recorded in 2013. Total tax payments in 2014 were $20 million, with sales up 25 per cent.
The results were something of a surprise at the time, as after many years of recording losses Coca-Cola Vietnam was finally in a position to pay tax. It also followed on the heels of continued suggestions that the company was engaged in transfer pricing activities.
First arriving in Vietnam in 1960 then returning in 1994 after the US lifted its trade embargo, Coca-Cola announced losses for most of its 20 years, ranging from VND39 billion ($1.74 million) to VND250 billion ($11.19 million) annually. In 2010 it reported losses of $8.99 million.
There has been no evidence presented to show that Coca-Cola Vietnam has indeed been engaged in transfer pricing. Mr. Finan said previously that Coca-Cola Vietnam was willing to invite the government to inspect its tax affairs. He has also said that after working with tax agencies they acknowledged the company had followed the rules.
Professor Dinh Trong Thinh from Institute of Finance said that many countries are able to collect taxes from companies because the figure is based on revenue. In Vietnam, however, the figure is based on profit, so if losses are recorded there is no tax obligation.
Other major brands have also been suspected of engaging in transfer pricing activities, such as PepsiCo, Nike, Nestle, Keangnam Vina, Metro Cash & Carry, and Adidas. But no final statements from authorities on this are released.