BMW importer fights tax evasion charges

Previously, Euro Auto (EAC) won the court case that the Ho Chi Minh City Department of Customs imposed a decision of $4 million in back taxes. The customs is now appealing to the Supreme Court.

The case relates to the service fees for training and marketing, calculated by the percentage of the car import value.  The customs claimed that such fees should be included in the imported value.
However, Euro Auto CEO Horst J. Herdtle said that these fees were independent from the car import value, in that such fee is not the condition precedent for the seller to sell the car to the buyer.

Even before the service agreement was signed, EAC has been buying cars from Asia Auto Finance (AAF) in Hong Kong, and after this service agreement was terminated, EAC still purchases car from AAF. WTO rules and Vietnamese laws stipulate that only a part of “proceeds after resale” would be considered as an adjusted value, where as in all the contracts that the customs found, the service fees are calculated independently from the resale, let alone the proceeds after resale.

In 2010, EAC contracted AAF to coordinate and provide EAC with training, marketing support, business development services and other consultancy services. EAC paid fees for the received services. The goal was to professionalise EAC staff and ultimately increase market share and sales volume.   

From the beginning of 2010 and the middle of 2012, AAF coordinated and organised a multitude of training, marketing support and consulting activities, which have been diligently recorded, verified and proven to customs and to the Ho Chi Minh City administrative court.

The court has ruled for EAC and that the customs decision had no legal basis under Vietnamese laws as well as WTO Agreement on Customs Valuation. With the victory at the court, EAC did not have to pay the adjustment amount.