Citing delays, Kumho seeks tax refund

There are always two sides of the coin when it comes to tax

Kumho Asiana Plaza Saigon, which is the owner of a high-end complex in Ho Chi Minh City, with an InterContinental Hotel, an office building and a serviced apartment building, has just sent document to the Ho Chi Minh City Department of Customs proposing a refund of VND14.3 billion ($687,500) it paid for the goods.

“We see that imported goods to serve our project qualify with import tax refund under regulation of Article 113, Circular 194/2010/TT-BTC,” said the report. Accordingly, pursuant to Clause 12, Article 113 under the circular, cases eligible for tax refund consideration includes exports and imports for which duty has been paid but are later eligible for tax exemption or refund under decisions of competent state agencies may enjoy tax refund.

The proposal came after the local department of customs’ conclusion that the company would no longer enjoy investment incentives in line with its initial investment certificate due to its changes in process of implementing the investment project. According to the first investment certificate No.1601/GP issued in 1996, the company was exempted import tax for machines, equipments and materials imported to serve its projects.

However, due to negative impacts of the Asian economic crisis in 1998, the project had been delayed, which was also reported to competent agencies.

In late 2006, the investor continued carrying out the project. The Ho Chi Minh City People’s Committee granted the investment certificate No.41104300338 to the company which replaced its previous investment licences. The investor also increased the investment capital up to $255 million in October 2007.

With a series of changes in the process of implementing work, the project was extended. But, customs agencies decided the firm would no longer benefit from incentives. According to the local department of customs, when the investment certificate was changed in 2006, the company did not carry out the project in accordance with its investment licence’s process and also did not ask for an extension of the free list and no longer merited the tax exemption.

After the customs agency’s conclusion, the company frequently disputed the claim to the relevant authority. But, while waiting for the Vietnamese authority to reconsider, the company had to import goods to serve projects without import tax exemption with worth of VND14.3 billion ($687,500).

However, the company said according to the Ministry of Finance’s Document 10755/BTC-CST dated July 28, 2009 and the State Audit’s Document 1041/KTNN-TH dated July 19, 2012, if the tax incentives under the investment certificate No.1601 was higher than the level in the Ho Chi Minh City People’s Committee investment certificate No.41104300338, the company would be allowed to continue enjoying incentives in the first one.