Major shareholder assures Euro Auto’s legal compliance

Sime Darby Motors issues a defense of Euro Auto Corporation on several charges reported by VIR

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Malaysia-based Sime Darby Berhad, whose automotive arm SDM holds 99 per cent in EAC, has sent to VIR clarification on some points in our previous article headlined “Euro Auto introduced new BMW without customs clearance.”

According to Ahmad Shahriman Johari, Sime Darby Berhad’s spokesperson, the new model mentioned in the article (the BMW 320i Sport) is actually an existing model from EAC’s stock (model year 2016), which the company has kitted out with additional accessories locally and named the “Sport Edition.”

It is not a new model that the company illegally made available after the General Department of Vietnam Customs stopped clearing EAC’s imported cars on December 1, 2016.

The two BMW 520i cars that Euro Auto handed over to Mövenpick Hanoi on February 28, 2017 and the two BMW 5 Series delivered to InterContinental Nha Trang at the end of March 2017 are also cars that the company had in stock prior to December 1, 2016.

Regarding the allegations that Euro Auto has been found using fake papers, including contracts, invoices, packing lists, and certificates of quality (C/Q), to import BMW car units to Vietnam, Johari said that these actions were done by EAC’s forwarding agent, Viet A Trading and Logistic Co., Ltd, which has been working with EAC since 2007.

“Its (the company’s) services were terminated in January 2017 and the forwarding agent was detained by the police on April 26, 2017. EAC has appointed a new forwarding agent, recommended by the BMW principal, in January 2017,” he said.

Meanwhile, regarding the alleged buying and selling of VAT invoices from other companies to evade domestic tax, Johari clarified that the 97 invoices in question were issued between 2012 and 2016 to EAC’s Hanoi Branch and EAC has claimed for input VAT from the tax authorities.

He said EAC did not purchase these invoices, they were issued by companies from which EAC bought goods and services from 2012 to 2016, making due payments. These companies existed then, but when the tax authorities audited EAC during the tax finalisation of its Hanoi Branch in October 2016, they had since ceased operations.

“Nevertheless, EAC has co-operated with the tax authorities and when EAC was instructed to adjust its input tax, the company duly obliged. It is common for tax authorities to instruct companies to adjust their tax if it discovered during audits that the suppliers have ceased operations,” he said.

He also said that the special consumption tax fraud of over VND6 billion ($260,870) from violating Circular No. 130/2016/TT-BTC issued on August 12, 2016 by the Ministry of Finance (MoF) was not intentional and that the company has made amends.

“The Vietnamese government had issued a new decree that took effect on July1, 2016 regarding amendments on the application of the Special Consumption Tax. EAC was unsure how to apply these changes and waited for the issuance of the circular dated August 12, 2016, which provided greater detail and guidelines for implementation. In trying to understand the implications, EAC only implemented the required changes from September 30, 2016,” he explained. “This affected 93 cars during the three-month period (July to September 2016) and EAC had paid the tax difference of VND6.1 billion ($260,870) and penalty of VND1.3 billion ($57,250).”

He also denied that the cars EAC imported passed through Malaysia.

“EAC imported Left Hand Drive cars directly from BMW AG. The port of origin is in Germany and the ship docks at Saigon Port in Ho Chi Minh City. These cars did not travel through Malaysia (a Right Hand Drive market) to go to EAC,” he said.

SDM became the majority shareholder of EAC on November 15, 2013, effectively holding a 90 per cent shareholding in EAC, which has increased to 99 per cent on May 15, 2017.