Disputes drag on over inconsistent tax incentives

Zamil Steel Vietnam

Ho Duc Phoc, auditor general of the State Audit Office of Vietnam, last week highlighted Unilever Vietnam as an example of the issue, citing its corporate income tax (CIT) arrears of $25.2 million from its expansion in the Mekong Delta city of Can Tho.

Tran Vu Hoai, vice president of Unilever Vietnam’s Sustainable Business and Communications, said in a document sent to VIR last week, “The outstanding tax issue in question relates to our expansion investment during 2009-2013 and is due to the differences in the stipulations of the laws on investment and CIT for the pre-2014 period. Differences in the stipulations of these laws have led to different interpretations, causing difficulties for businesses and relevant agencies.”

Unilever Vietnam is not alone in this problem, as Zamil Steel Vietnam, Suntory Pepsico Vietnam Beverage, Canon Vietnam, and Yamaha Motors are all reportedly fighting similar battles. All disputes on CIT incentives are based on the differences in incentives available to new and expansion projects and changes in the laws between 2009 and 2013. Specifically, prior to 2009, expansion projects and new projects were entitled to the same levels of CIT incentives. However, during 2009-2013, the Law on Investment encouraged investment in new projects, whereas the CIT regulations offered fewer incentives for the expansion of existing projects. As a result, while expansion projects were only entitled to a three-year CIT exemption and a 50 per cent reduction in five years, new investment projects could enjoy other incentives stated in their investment certificates.

In a document submitted to the prime minister, Zamil Steel Vietnam stated that it had already paid the difference of about VND6.5 billion ($282,608) for its expanded investment project in the southern province of Dong Nai. “The issue arose due to inconsistencies in the guiding documents related to policies about tax reduction and exemption, and the contents of the investment certificate for our expansion project, the determination of which was beyond our control,” the document noted.

Currently, Zamil Steel Vietnam is asking the prime minister for exemption from paying late payment fees, and from any fine on late tax declaration.