Authorities call in LG subsidiary’s VND6.8 billion tax arrears

January 01, 2017 | 15:11

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The General Department of Vietnam Customs has requested LG Electronics Vietnam, a subsidiary of LG Display, located in Dinh Vu-Cat Hai Economic Zone (EZ, Haiphong), to pay tax arrears and an additional fine worth VND8.1 billion, according to newswire Dantri.

Notably, the LG Electronics failed to declare its special relationship with its partner LG Display member companies. Besides, the company has yet to declare the insurance charge and container imbalance charge (CIC) for its batches of goods imported from foreign fellow member companies of LG Display.

Accordingly, the company will have to pay tax arrears of VND6.8 billion ($298,893) and a fine of VND1.3 billion ($57,141). Previously, the company confirmed that the lack of declaration of the special relationship between it and LG Display’s member companies is only its laches.

However, in reality, the lack of declaration of the special relationship between member companies of the same group is considered a sign of transfer pricing and tax evasion.

In April 2015, LG Display inaugurated its 800,000-square-metre electronic manufacturing complex in Trang Due IP in Dinh Vu-Cat Hai EZ, which specialises in producing price-competitive electronic goods, including televisions, mobile phones, washing machines, and air conditioners. The total sum of $1.5 billion invested in the complex will be disbursed between 2015 and 2028.

Being LG’s largest facility in Southeast Asia, the complex helps to make Vietnam one of the largest electronics export hubs in the world. Furthermore, it opens up good opportunities for part suppliers in Vietnam to co-operate and meet the group’s demand for support services and components. In the next five years, 70 per cent of the Haiphong-based complex’s products will be exported to 35 countries worldwide.

In addition, on May 6, LG Display organised the ground-breaking ceremony of the $1.5-billion hi-tech screen (OLED) production factory in Trang Due IP.