Inspection of transfer pricing to be conducted at Big C Vietnam
Vietnam tax authorities have said that they are considering whether Big C Vietnam has committed transfer pricing.
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An official of the tax agency told Tuoi Tre Newspaper that based on the appendix on the business registration license, Casino Group (France) owns Cavi Retail Company (Hong Kong).
Meanwhile, Cavi Retail Company (Hong Kong) owns three companies: Vietnam – Japan Real Estate JSC (leasing retail space for 32 supermarkets of Big C Vietnam), EB Services Ltd. in HCM City (distributing goods for 32 Big C supermarkets in Vietnam) and the system of 32 Big C supermarkets across the country.
"This diagram shows that this is transfer pricing relations, with the possibility of transferring some expenses abroad such as management fees, franchise fees, interest ...," the official confirmed.
According to the General Department of Taxation, under the updated chart on December 31, 2014 of Casino Guichard Perrachon Group at http://www.groupe-casino.fr/en/, this group owns 16 legal entities in Vietnam, including the Vietnam Japan company and 32 Big C supermarket in Vietnam.
But it did not mention the Cavi Retail Ltd (Hong Kong), which directly owns Big C Vietnam chain.
Meanwhile, according to business registration license in Vietnam of this corporation, Cavi Retail Ltd (Hong Kong) owns the system of 32 Big C Vietnam supermarkets.
In addition to the lack of transparency in the disclosure of information, according to an official of the tax authorities, Casino Group’s establishment of a company in Hong Kong, known as "tax haven", to do business in Vietnam shows the intention of avoiding taxes through transfer pricing.
Vietnam can collect VND3,600 billion of taxes from Big C acquisition deal
Relating to the transfer of Big C Vietnam supermarket chain between Casino Group of France and Central Group of Thailand, the tax authorities said it has sufficient legal basis to collect taxes from this affair.
Cavi Retail (Hong Kong) - a subsidiary of the Casino Group (France) - transferred Big C Vietnam to the Central Group (Thailand).
Under the Law on Corporate Income Tax of Vietnam, foreign companies that do not have a permanent establishment in Vietnam but derive income from Vietnam have to pay taxes for the income earned in Vietnam.
Therefore, although Cavi Retail (Hong Kong) and the Group Central (Thailand) are located outside the territory of Vietnam, Big C system has generated income in Vietnam. So when they transfer this system, the investors have to pay taxes.
The tax revenue from this case is estimated at about VND3,600 billion (US$180 million).
