Suzuki dismay at backdated $1.4m tax bill
Suzuki dismay at backdated $1.4m tax bill
Customs authorities still insist on Suzuki Vietnam paying a recalculated tax bill.
Japan-backed Suzuki Vietnam has continued to reject customs demands that the firm pay higher taxes on several shipments of motorbike components the company had imported for motorbike assembly in Vietnam.
Dong Nai provincial Customs Department presented the motorbike manufacturer with a recalculated tax bill that disputed 24 tax declarations submitted by Suzuki Vietnam Company (Visuco) in 2012 involving the import of components for the assembly of Suzuki GZ150, UA125 and EN125 motorbike models in Vietnam.
Under a customs decision released in November 2013, Visuco would be liable to pay VND30.8 billion ($1.4 million).
The customs department argued that the components Visuco had imported for assembly in Vietnam did not meet the breakdown level as regulated in Ministry of Finance’s Circular 49/2010/TT-BTC and Circular 194/2010/TT-BTC.
The Chinese component supplier of Visuco also noted that the components have been designated as CKD form.
After citing a series of existing regulations, the customs department reached the conclusion that Visuco’s import components fell under CKD form for assembling Suzuki GA150-A, EN125-A FI and UA125T FI motorbike models and could be classified as completed goods. The company currently only buys minor components such as buffers, bolts, screws and handles for their assembly plant in Vietnam.
“Therefore, the company needs to pay import duty as applied to CKD components and not those levied on import components that the company previously enjoyed,” a customs report concluded.
In fact, the import duty levied on motorbike import components meeting breakdown levels averages between just 10-15 per cent, whereas the import duty levied on component sets under CKD form is at least 45 per cent if the component sets satisfy C/O ASEAN form D requirements. If these criteria are not met the import taxes could increase to as high as 75 per cent.
Visuco has obviously objected to paying additional taxes of $1.4 million and said the difference of levying tax codes and setting respective import duties was due to lack of clear guidance on import duties related to imported motorbike components.
“The regulations on breakdown levels in circulars 49 and 194 have commonly applied to machinery of all kinds whereas motorbikes and auto components have specific features. For auto components, the Ministry of Science and Technology has enacted concrete regulations guiding and classifying the breakdown level of import components for assembling in Vietnam, meanwhile motorbike component imports still lack such concrete regulations,” said Visuco managing director Masami Haga.
At present, Visuco is one of five foreign-invested motorbike businesses in Vietnam. However, its sales volume was reportedly the lowest among them. Last year, the company only sold 50,500 motorbike units, a sixth of its annual production capacity. Sales volumes for other foreign-invested firms last year included Italy-backed Piaggio Vietnam selling 56,200 units, Taiwan’s SYM with 82,000 units, Yamaha Vietnam with 731,000 units and Honda Vietnam 1.87 million units.
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