Keangnam faces fresh controversy over unpaid taxes
Keangnam faces fresh controversy over unpaid taxes
South Korean developer Keangnam Enterprise Ltd. is facing difficulties in Vietnam due to a series of tax issues arising from its key construction projects in the country.
Last week, northern Yen Bai province’s Tax Department confirmed with VIR its intent to collect tax arrears of over VND6.7 billion ($307,340) from Keangnam.
The decision came after an investigation found fraudulent behaviour in the declaration of royalties and payment of environment protection fees by the Korean firm.
In addition to fraudulent activities, as the main contractor of the Noi Bai-Lao Cai highway project’s segment stretching through Yen Bai province, Keangnam missed the completion deadline. The firm is also facing claims of poor-quality construction.
In November last year, Keangnam sent two documents to the tax department within a week, asking to halt pending enforcement measures, but the tax department replied with a simple shake of the head.
“Keangnam Enterprise Ltd. is not eligible for any clemency measures,” stated the Yen Bai tax authority in reply to Keangnam’s documents.
The tax agency must wait until the end of January 2016, by which time the debts will be overdue by a period of 90 days, before taking any enforcement measures.
In another project in the Phu Tho province, Keangnam so far has been unable to satisfy its tax obligations. Recently, the Korean firm sought a waiver of late payment fees from the provincial tax agency.
Keangnam won the bid to be the main contractor of a wastewater collection and treatment system project located in Phu Tho, in a deal valued at more than $41 million. The project received the majority of its financing ($32.906 million) as official development assistance from the Korea Economic Development Cooperation Fund.
Unlike the Yen Bai tax authority, Phu Tho Tax Department approved Keangnam’s request, as the tax agency was persuaded by the company’s argument that Phu Tho province’s late payment of the contracted value hindered its completion of tax obligations.
VIR contacted Keangnam’s subsidiary in Vietnam, Keangnam Vina Ltd., to ask about its plan to fulfil its duties in the aforementioned projects, but did not receive any response.
Earlier, its Hanoi-based Landmark Tower project faced tax arrears of VND95.2 billion ($4.37 million) in corporate tax for its apartment sales business. Keangnam was found to have wrongly declared VND1.2 trillion ($55.04 million) in 2013 and was forced to adjust its financial statements. The Landmark Tower, Vietnam’s highest building, was recently acquired by the South Korea’s AON Holdings at the price of $800 million. The sale was conducted to resolve Keangnam’s liquidity problems.
