Vietnam customs authority stands firm against Philip Morris

>> VPM files legal action over copyright license tax bill

In late November, Vinataba-Philip Morris Limited (VPM), a joint venture between the state-owned National Tobacco Corporation and PT Hanjaya Mandala Sampoerna Tbk, an affiliate of PM Global Brands, sued the director of Can Tho Department of Customs Nguyen Huu Co to reexamine the department’s tax calculation for the company.

The claim related to a dispute over a copyright license fee that has started in March 2012 which required the company pay additional taxes.

The department claimed the company paid a copyright license fee to Marlboro products for the entirety of 2011 to partner PM Global Brands (PMGB) which had not been included in its tax filing.

According to the contract between VPM and PMGB, the local company was required to use imported materials from PMGB, as well as pay them 12 per cent of its local sales each quarter. The total value of the agreement was $2.95 million in 2011.

Can Tho customs authorities said the paid fees for licensing rights were subject to tax.

Once established, customs department director Nguyen Huu Co issued a decision demanding tax payments of VND4.95 billion ($235,714) and a 10 per cent fine on the duty.

VPM argued that the contract only regulated the trading of materials but did not include anything about licensing rights. They argued there was no connection between the two.

Once they received the decision of the customs department, the company paid the full amount required and has since mounted two unsuccessful bids for the decision to be overturned.

The General Department of Customs, in a document replying to VPM in late 2012, agreed with the Can Tho Department of Customs and said their decision was correct as per stipulations of taxable value on a licensed copyright.