Competent authorities have requested Ford Vietnam to pay tens of billions of dong in tax arrears, after they have discovered that the automobile joint venture made wrong tax declarations. Some other automobile manufacturers are also facing the same problem.

Ford Vietnam found as making wrong tax declarations

The information that Ford Vietnam is facing tax arrears collection was confirmed by an official of the General Department of Customs with Tien Phong.

The Hai Duong provincial customs sub-agency has discovered that some sets of car parts imported by Ford Vietnam did not have the characteristics coinciding with the declared characteristics. The separation level of the imported car parts was lower than declared, therefore, the imports must be imposed the tax rate applied to the imports under the mode of complete built units (CBU).

Vietnam is striving to build up an automobile industry of its own and it is encouraging enterprises to make car parts domestically instead of importing car parts for domestic assembling.

In an effort to protect local production and encourage the localization, the tax policies have been designed in a way so as to encourage car parts instead of sets of car parts, and the car parts with higher separation levels can enjoy lower tax rates.

As such, instead of importing finished products, manufacturers would try to import separated parts to assemble domestically to be able to enjoy lower import tariffs.

The report by the Hai Duong Customs Sub-agency clearly pointed out that the imported car parts have the separation levels lower than the required separation levels stipulated in the Decision 05 by the Ministry of Science and Technology. The customs tax agency has concluded that Ford Vietnam made wrong tax declarations, and the automobile manufacturer must pay tax arrears in accordance with the laws.

The additional tax sum that Ford Vietnam has to pay in April alone is as high as tens of billions of dong. If considering the declaration by Ford Vietnam, the automobile only had to pay two billion dong for a consignment of imports on April 6. Meanwhile, the customs agency has later asked it to pay 10 billion dong more.

The problem is so serious that at some moments, hundreds of sets of car parts imported by Ford Vietnam could not get customs clearance and got stuck at the ports. As a result, Ford Vietnam had to lodge complaints to many relevant ministries and branches.

Tien Phong has quoted an official from the General Department of Customs as saying that the behavior of Ford Vietnam can be considered as evading tax. The problem is being considered by relevant ministries and branches.

“The government and relevant ministries have been reported about this and they are considering how to deal with the problem,” the official said.

The official has revealed that since relevant ministries have not reached a consensus on the issue, though the decision to force Ford Vietnam to pay tax arrears has been released, the automobile manufacturer still has not paid the tax arrears.

Not only Ford Vietnam, many other automobile assembling joint ventures have also found has making similar behaviors to evade tax.

Manufacturers commit frauds, or regulations vague?

Sources said that automobile manufacturers have sent documents to relevant ministries, asking to amend the current regulations which they believe have become “out of date”. Meanwhile, relevant ministries have been embarrassed in defining the separation levels of import car parts.

In late May 2011, Deputy Minister of Finance, Do Hoang Tuan Anh sent another dispatch to the Ministries of Science and Technology, Industry and Trade, and Transport to consult about the relating issues. In the latest news, relevant branches have set up an inter-ministerial taskforce to define the way of calculating tax.

Meanwhile, the officials of GDT dare not provide information to mass media. They just report the case to the higher levels and wait for final decisions.

C.V