Honda Vietnam protests against $160 million tax arrears

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Honda Vietnam protests against $160 million tax arrears

Honda Vietnam has filed a petition to the government after being told to pay tax arrears of VND3.34 trillion ($160 million) by local customs agencies.

Honda Vietnam protests against $160 million tax arrears
Illustration photo

The tax arrears bill for Honda Vietnam’s imports over the past five years was issued after a recent scheduled examination jointly carried out by Hanoi and Vinh Phuc customs departments.

But the firm protested and provided clarifications highlighting misunderstandings taking root in the way some related regulations concerning separation level were previously and are currently understood.

The manufacturer expressed concerns over the long-term business operations should the issue remain unresolved.

Established in 1996, Honda Vietnam started manufacturing motorcycles in 1997 and automobiles in 2006 with the total turnover up to now of 10 million and 20,340 units respectively. The labor force now totals 100,000 people and the amount of tax contributed has reached VND20 trillion (USD970.8 million) so far.

Deputy Prime Minister Hoang Trung Hai has requested the Ministry of Finance to report on the case, said the Government Office.

The tax arrears collection will affect the business development of Honda Vietnam, newswire Vnexpress quoted Hiroshi Kitamura – Japanese Chargé D’Affaires in Vietnam who has sent a postal mail to the Ministry of Finance, General Department of Customs and Ministry of Industry and Commerce on the problem.

In the letter, Hiroshi said Honda Vietnam is facing difficulty because of the then and now understandings of tax treatment for imported spare parts for car assembly.

Mr. Hiroshi added that if the tax arrears are paid, it will negatively affect the development of business activities in Vietnam and the employment of Vietnamese workers.

It will also affect the confidence of foreign investors in Vietnam or those who are prepared for investing in the country, including Japanese companies.

Ford Vietnam last month was requested to pay VND32.5 billion (USD1.57 million) by Hai Phong Customs Department due to false tax declarations.

But the total tax amounts liable have been calculated at VND40.7 billion (USD1.97 million), nearly VND8.25 billion (USD400,485) of which has already been paid.

In addition, 155 customs declaration forms of car parts imported through Customs Department are being reviewed, 90 of which reveal components for assembling Focus, 35 for Escape, 6 for Mondeo, the remaining for Fiesta and Transit vehicles.

The additional tax collection is inevitable due to some current vague regulations, a senior customs officer told Vnexpress.

In reality, not only Ford Vietnam but also other famed automobile manufacturers namely Vinamotor, Vidamco and Toyota have run into trouble making customs declarations for automobile component imports.

Imported car components that are eligible for separation level criteria can enjoy a preferential tax rate of 0-27 percent.

Meanwhile, complete parts if detected will be imposed a tax rate of 80-82 percent which is the tax rate for importing a whole car.

Ford Vietnam now has 160 customs declaration forms which will be imposed car import tax rates rather than the preferential rates due to their failure to meet the requirement of separation level.

The tax arrears collection has been conducted since March when some consignment of automobile part imports of Ford Vietnam was inspected by Hai Duong Customs Department.

Several components failed to satisfy the required separation level in order to be eligible for the favorable tax rate of 0-27 percent.

(source by Tuoi Tre)

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