CocaCola Vietnam got fined $35.5 million for tax evasion over nine years according to VnExpress. News of tax evasion by Vietnam’s Coca-Cola caused circulating news about foreign companies in Vietnam. The government should investigate tax evasion allegations to those companies.
The amount of tax evasion by CocaCola announced by the authorities totaled $35.5 million. Including $15.5 million in corporate tax, $2.6 million in value-added tax, and $2.2 million in over-the-counter tax.
In addition, the authorities imposed $12.5 million in overdue fees and $2.6 million in fines for administrative violations.
In response, the CocaCola Company of Vietnam said, “Some 2$13 million should be deducted from the amount that was unable to carry forward losses between 2002 and 2006.”
It also claimed that there were minor mistakes in tax returns from 2007 to 2015. The management said it does not agree with the tax authorities’ conclusion. But will abide by Vietnamese laws and cooperate with the authorities.
Criticism for CocaCola Vietnam following tax evasion report
Criticism in Vietnam has soared as CocaCola received a sentence of fine for tax evasion and its response to the alleged tax evasion. There have been claims that not only CocaCola but also many foreign companies are trying to evade taxes in Vietnam. The authorities and experts note the possibility that these foreign companies may tamper with transfer prices to evade taxes.
The transfer price is the price of the supply of raw materials, products and services between the parent company and its overseas subsidiaries of a multinational company that has entered the country.
Critics point out that some multinational companies are evading taxes by manipulating their transfer prices. It is to maximize their post-tax profits by taking advantage of differences in corporate tax rates between countries.
Consumers are also reacting coldly. When news broke about CocaCola’s alleged tax evasion, there was a flurry of responses.
Many predicted the blow to be even more severe as it is not a secret that the Vietnamese CocaCola side has been exempt from corporate income taxes since 2011 due to accumulated losses.
Meanwhile recently Vietnam announced a win over the U.S.-China trade war.
