PM steps in to end Phu My Hung tax row

Nguyen Bich Dat, deputy minister of planning and investment, confirmed that Prime Minister Phan Van Khai had, after consulting heads of relevant ministries, said a corporate income tax (CIT) rate of 25 per cent, rather than 10, would be applied to the Phu My Hung joint venture.
Phu My Hung corporation is a joint venture between Taiwan’s Central Trading and Development Corporation and Tan Thuan Industry Development Company.
The venture was initially capitalised at $242 million, with 30 per cent contributed by the Vietnamese party, and 70 per cent contributed by the Taiwanese.
Bui Thanh Son, deputy general director of Phu My Hung joint venture, told Vietnam Investment Review that controversies remained over the CIT level required to be paid by the company.
He said the two parties, the government and the company had their own reasons to protect the CIT level they felt was appropriate. He declined to make any further comments.
Before the issue heated up, Phu My Hung claimed that it should enjoy a CIT level on land and housing trading activities of 10 per cent, in accordance with the investment licence granted to the joint venture in 1993.
However, Nguyen Van Huyen, deputy general director of the General Department of Taxation (GDT) also said the joint venture’s investment licence did not make it clear whether the venture could trade land and housing.
According to the Ministry of Planning and Investment (MPI), however, current regulations meant a CIT level at 25 per cent had to be applied.













Nguyen Van Huyen, deputy general director of the General Department of Taxation (GDT) also said the joint venture’s investment licence did not initially state the venture could trade land and housing.
So the scope was modified in an additional licence, granted by the Ho Chi Minh’s people committee to the company, but when a CIT level of 25 per cent was applied the dispute began.
Huyen said all activities, including land, housing, infrastructure development, written in the renewed investment licence, would be separate and subject to CIT level at 25 per cent.
However certain activities, not mentioned by Huyen are still to be kept at the preferential CIT level of 10 per cent.
The Prime Minister’s decision would be confirmed in writing over the next few days, accompanied by the adjustments of investment licence granted to the Phu My Hung, said Huyen.
Truong Chi Trung, vice minister of Finance said tax agencies were conducting an appraisal and examinations to ascertain the specific amount of CIT the Phu My Hung joint venture has to pay and how much profits the company is permitted to repatriate.