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Transfer pricing: A conflict between enterprises and tax authorities (05/4)
05/04/2013 - 18 Lượt xem
Transfer pricing happens everywhere
According
to Vietnam's Association of Foreign Invested Enterprises Chairman,
Prof. Nguyen Mai, the tax evasion of FDI enterprises in the form of
transfer pricing had been a concern of the world in recent years. The
US's Harvard University also has a lesson to help enterprises evade
taxation. Therefore, Vietnam should not consider transfer pricing as a
shocking issue and enterprises with transfer pricing behavior as
terrible enterprises. In fact, over the years, FDI enterprises have made
an important contribution to the socioeconomic development.
Deputy
Minister of Industry and Trade Tran Tuan Anh after attending some
meetings held by the ministries and agencies in the problem of transfer
pricing said that the Government fully agreed with Prof. Nguyen Mai's
opinion. Transfer pricing is not a separate phenomenon of FDI
enterprises operating in Vietnam and its problem happens in many
countries. This is an activity of enterprises taking advantage of law
for their benefits.
Hoa
Sen Group Managing Director Le Phuoc Vu said that Vietnam should have a
right approach to transfer pricing. If a person works for the General
Department of Taxation, he will find the best way to collect enough
taxes. On the other hand, if that person works for FDI enterprise, he
must find the best way to help their enterprise pay minimum taxes.
Therefore, transfer pricing obviously is a conflict between tax
collector for the Government and taxpayer for enterprise.
Improving legal documents to limit transfer pricing
According
to Deputy Minister Tran Tuan Anh, to limit transfer pricing, it was
necessary to further improve the legal framework and complete legal
documents to harmonize the interests of the Government and investors.
Le
Phuoc Vu said that transfer pricing in FDI enterprises directly
impacted on Vietnamese enterprises, including the Hoa Sen Group. The
majority of Vietnamese enterprises must borrow capital from banks with
high interest rates, while FDI enterprises have more advantages than
Vietnamese enterprises in terms of many aspects. It means that transfer
pricing is extremely important issue and should be resolved.
Policy
makers and the State management agencies need to make completed legal
documents to limit transfer pricing in FDI enterprises.
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The FDI sector’s contributions to the economy
According
to Deputy Minister of Planning and Investment Dao Quang Thu, the FDI
sector has higher GDP growth rate compared to the national growth rate.
In 1995, GDP of the FDI sector increased by 14.98 percent while GDP of
Vietnam increased by 9.54 percent. These figures were 11.44 percent and
6.79 percent in 2000; 13.22 percent and 8.44 percent in 2005; 8.12
percent and 6.78 percent in 2010 respectively. The FDI sector’s
contributions to GDP increased from two percent in 1992 to 18.97 percent
in 2011.
The
impact of the FDI sector on the economic growth is shown by the
additional capital for total social investment capital. In the 2001-2011
period, the FDI sector added US$69.47 billion, accounting for 22.75
percent of total social investment capital. The share of FDI sector in
the economic structure in the 2000-2011 period increased by 5.4 percent.
FDI
also significantly contributes to export activities. Before 2001,
export of the FDI sector reached only 45.2 percent of total export
turnover, including crude oil. Since 2003, export of the FDI sector has
begun to exceed its domestic sector to become a major factor, accounting
for 64 percent of total export turnover in 2012.
FDI
also contributes to an increase in the budget. In 2012, the FDI sector
contributed US$3.7 billion (excluding crude oil) to the budget,
accounting for 11.9 percent of total budget revenues.
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Source: SaigonTimes.
