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The best-known transfer pricing cases in Vietnam

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Nearly 38 percent of foreign invested enterprises (FIEs) reported losses in 2017, a significant decrease from the 50 percent seen in previous years. However, transfer pricing by FIEs remains a headache for management agencies.

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Do Thien Anh Tuan of Fulbright University said that enterprises that most regularly report losses operate in manufacturing, garment & footwear, household-use production, and retail and beverage sectors.

Meanwhile, the HCM City Taxation Agency noted that the FIEs in retailing and beverage industries always top the list of reported unprofitable enterprises.

Another report showed that 90 percent of textile & garment FIEs in the city reported losses, while Vietnamese enterprises in the same field reported profit, though FIEs are believed to have bigger advantages.

Coca-Cola Vietnam, Pepsi Vietnam

Coca-Cola continuously reported losses from 1992, when it began operation in Vietnam, until 2012, though its output increased steadily by 25 percent per annum.

By December 2012, its accumulative loss had reached VND3.768 trillion, much higher than the initial investment capital of VND2.95 trillion. 

However, instead of scaling down production, Coca-Cola in 2014 poured $210 million more into its company in Vietnam.

The move raised suspicion that Coca-Cola conducted transfer pricing, but the evidence was weak. 

From 2013, Coca-Cola Vietnam began reporting profits and paying corporate income tax.

Pepsi Vietnam has a similar story. It has been reporting losses in the last 20 years.


Adidas’ subsidiary in Vietnam was set up in 2009.

In late 2012, local newspapers published stories, alleging that the footwear company conducted transfer pricing to avoid tax.

Adidas registered its business in Vietnam as a wholesaler, but it was found having expense items like a retailer. Adidas Vietnam is not a manufacturer, but it has to pay royalties (6 percent) to Adidas AG and international marketing fee (4 percent of net revenue). 

In addition, it also has to pay 8.25 percent of transaction value in commission to Adidas International Trading B.V.

The existence of many kinds of intermediary costs increases the import costs of Adidas products and helps it avoid corporate income tax.

Metro Vietnam

During its 12 years of operation, in 2002-2013, Metro Vietnam six times changed business license and raised its investment capital from $120 million to $301 million in May 2013. 

However, at the same time, it reported losses with the accumulative loss of VND1.657 trillion and it only made a profit of VND173 billion in 2010.

GDT, after the inspection, decided that Metro’s loss must be lower than declared and that the distributor had to pay VND500 billion in tax arrears.


Tax officials discovered many unreasonable expense items and decided to collect tax arrears of VND95.2 billion after adjusting the profit in 2007-2011.



Source: VietNamNet

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