Collecting tax debt of 3,600 billion VND from BigC

Faced with information about the risk of tax loss from the Big C transfer deal estimated at up to 3,600 billion VND, the General Department of Taxation has affirmed that there is enough basis to collect tax from Big C.

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The General Department of Taxation has sent an official dispatch to the People's Committee, the Department of Planning and Investment and the Tax Departments where BigC supermarkets are located, requesting a review of regulations before granting a Business Registration Certificate and changing information about BigC's legal representative.

According to Vietnamese regulations, the deadline for submitting tax declarations is the 10th day from the date the parties agreed to transfer capital, but up to now, since the date of the transfer, the tax authority has not yet received the declaration and tax payment documents. On April 29, 2016, a press release from Casino Group (France) announced the completion of the transfer of the BigC Vietnam supermarket system to Central Group (Thailand). The current problem is that the state is at risk of losing tax revenue when the estimated amount of tax collected from the transfer of BigC is up to 3,600 billion VND.

However, Mr. Nguyen Dai Tri, Deputy Director General of the General Department of Taxation, expressed confidence in the ability to collect taxes on this deal. “Based on the provisions of the Law on Corporate Income Tax as well as the guiding Circulars of the Ministry of Finance, it can be said that the income arising from the transfer of the BigC Vietnam system originates from Vietnam and must be subject to corporate income tax, which is in accordance with the provisions of Vietnamese law as well as the provisions of the Agreements on tax and income from transfers. On that basis, the General Department of Taxation will have analysis, assessment and measures for enterprises to fulfill their tax obligations to the host state,” said Mr. Nguyen Dai Tri.

The companies involved in this transaction are all located outside of Vietnam, but the Big C Vietnam system generates income from Vietnam, so when transferring this system, the investor must pay tax. The Law on Corporate Income Tax clearly stipulates that the tax amount is calculated based on the total transfer value minus the total investment capital and expenses, then multiplied by the tax rate of 20%.

Article 1 of Circular No. 103/2014/TT-BTC dated August 6, 2014 stipulates that foreign organizations subject to corporate income tax include foreign organizations that conduct part or all of the business of distributing goods in Vietnam, in which the foreign organization remains the owner of the goods delivered to Vietnam or is responsible for the costs of distribution, advertising, marketing the quality of goods delivered to the Vietnamese organization or determining the selling price of goods. This is probably the best legal basis for the General Department of Taxation to cite, thereby considering Cavi Retail Company (a subsidiary of Casino) as a taxpayer.

Mr. Tri said that on June 13, the Big C Vietnam system sent a document to the General Department of Taxation informing that after receiving the Official Letter from the General Department of Taxation, the Central Group sent a document to the Casino Group to notify about the implementation of tax obligations. The General Department of Taxation will apply specific measures in accordance with the provisions of law as well as international commitments, in which the General Department of Taxation will focus on measures such as: The transfer must be carried out in accordance with the provisions of law, and at the same time consider whether there is a possibility that the Big C system is evading inspection in carrying out the procedures for granting a license to establish a retail establishment by establishing many business establishments under the BigC model. On that basis, the Ministry of Finance will also request coordination from relevant ministries and branches such as the Ministry of Industry and Trade, the Ministry of Planning and Investment to coordinate implementation.

“In the immediate future, on June 24, the General Department of Taxation sent a document to the People's Committee, the Department of Planning and Investment and the Tax Departments of the provinces and cities where BigC supermarkets are located, to review the regulations before issuing the Business Registration Certificate and changing the information of BigC's legal representative. At the same time, it requested the People's Committee and the Department of Planning and Investment of the provinces and cities to coordinate with the Tax Department to request BigC to declare according to regulations before carrying out related procedures,” said Mr. Nguyen Dai Tri.

In a recent development, the Department of Planning and Investment of Da Nang said it has not yet granted permission for BigC Da Nang to change its legal representative after the BigC Vietnam system changed ownership from Casino Group to Central Group.

According to Infonet