Honda Vietnam in trouble over incorrect local content claims
HO CHI MINH CITY - Inspectors are looking into the case of Honda Vietnam
making incorrect declarations of its local content ratios to see whether
it
is an intentional move to evade taxes or merely a mistake, the latter
point
being viewed by some as the likely reason.
No matter the reason, punitive sanctions will be imposed, an inspector
said.
The Japanese-invested motorcycle manufacturer is alleged to have wrongly
declared the local content ratios of its Wave Alpha, Super Dream and
Future
models. According to inspection results released early last week, the
actual
ratios in the three models are 35.9%, 52.34% and 54.62%, respectively,
compared to 50.45% in the first model and over 60% in the other two.
The source told the Daily the investigation now aimed to determine the
real
nature of the wrong declarations, despite both Honda Vietnam and some
inspectors insisting on calculation errors rather than deception.
One of the State inspectors assigned by the Government to look into the
case
said that Honda Vietnam’s false declarations were a mistake.
He explained that Honda Vietnam had purchased components made by other
companies and declared them as its own products after reconditioning the
parts. Yet, he acknowledged that this went against the regulations
governing
the local content ratio declaration.
An executive of the manufacturer also said the wrong declaration was a
mistake, blaming incorrect understanding of legal documents.
Deputy general director of Honda Vietnam Bui Doan Nguyen told the Daily
that
the company had not evaded taxes by such declarations, as the difference
did
not entitle the company to a lower tax rate.
“Circular 120 governing local content declaration took effect in early
2001,
but we had applied the rules in retrospect for components imported in
2000.
In any case, the tax rate remained at 10%, and the State Budget revenue
was
not affected,” Nguyen said.
An official in the import and export tax department of the General
Department of Taxation shared the opinion, saying back taxes would not
be
imposed in the case of Honda Vietnam.
However, whether Honda Vietnam’s case is a violation depends on the
final
conclusion of the inspectors, the official said.
The report about the local content of Wave Alpha motorcycles captured
the
public interest because it said the local content ratio of Wave Alpha
motorcycles was much lower than the ratio declared at the model’s launch
early this year.
The Wave Alpha has sold like hot cakes in the past months due to the
prestige of the manufacturer and its competitive price, less than VND11
million.
Earlier, the Vietnam Motorcycle and Bicycle Producers Association lodged
complaints that the proportion of Chinese-made components in Wave Alphas
was
higher than the company had declared. These complaints led to the
investigation.
By Minh Quang - Financial Times Information Limited - July 22, 2002
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