US$23.7 mln worth of violations at Metro Cash & Carry found
US$23.7 mln worth of violations at Metro Cash & Carry found
Vietnamese tax inspectors have found multiple violations at the local subsidiary of German retail giant Metro, estimating them to be worth VND507 billion (US$23.7 million).
Of the total amount, Metro Cash & Carry Vietnam was ordered to immediately pay VND62 billion (US$2.8 million) in arrears of income taxes for its foreign experts, news website VietNamNet reported on April 21.
As for the rest, more than 66% of which was illegitimate losses, the General Department of Taxation allowed the retailer to correct its violations by "making adjustments in its books," it said.
The department was quoted as saying that the company had to eliminate losses of VND245 billion (US$11.1 million) it reported in the 2006-2008 period.
Metro attributed the losses to franchise fees it paid its parenting company during the time, but it failed to register the franchise agreement with Vietnamese authorities as regulated. The losses, therefore, could not be accepted.
The retailer was also found setting aside excessive budget for depreciation and reserve funds, leading to another inadmissible losses of VND90 billion (US$4.1 million), according to the department.
Tax evasion suspicion
Metro Cash & Carry Vietnam, awaiting to be transferred to a Thai investor, is among foreign investors that are suspected of evading taxes through transfer pricing.
It reported accumulated losses of VND598 billion (US$27.2 million) from 2007-2010, but still managed to open 10 stores across Vietnam over the years, VietNamNet reported. The retailer now has 19 stores.
In fact, the Vietnamese cash-and-carry retailer did not pay any corporate tax for 12 of the 13 years it operated in Vietnam, consistently citing losses, according to tax inspectors, who started looking into the company following media reports about its lucrative M&A deal.
Last August it was reported that Thailand’s Berli Jucker PCL (BJC) offered to purchase the retailer for EUR665 million (US$876 million), which was three times higher than the total invested capital.
The deal was later stalled as 89% of BJC's shareholders voted against it.
However, BJC's major investor TCC Holding early this month announced that it will proceed with the takeover.
Under Vietnamese laws, Metro would be subject to at least 22% tax on the transfer.
