Metro Cash & Carry Vietnam's losses under investigation

Friday, Oct 03, 2014 16:17

A corner of Metro Cash & Carry Vietnam in HCM City. It is one of a numbger of FDI businesses to be examined this year. — Photo

HA NOI (Biz Hub) — The General Department of Taxation has decided to conduct an inquiry on Metro Cash & Carry Vietnam (MCC) after it continuously reported losses, according to website.

MCC is one of a number of foreign direct investment (FDI) businesses to be examined this year, reported the website. It also quoted a taxation department leader as saying: "Not a few businesses which are still enjoying preferential treatment have reported losses. Meanwhile, some of the others declared losses for many years while still expanding their investments."

The leader said that since the company began operations in Viet Nam in 2002, the taxation department had inspected it for a number of times till the end of 2011. During that time, the MCC almost always reported losses and said it failed to recover its investment capital and costs. During its 12 years of operations in Viet Nam, the company reported a profit only once: in 2010 for VND116 billion (US$5.5 million).

The firm opened its first supermarket in HCM City with an initial investment of $78 million and now has 19 distribution centres in 14 cities and provinces nationwide. It has just paid value-added tax, excise tax, land rent and other taxes but the taxation department has placed it under investigation for price transfers after it failed to pay business income tax.

Nguyen Dau, taxation department deputy chief inspector, said businesses reporting losses or profits were normal in the market economy, but many FDI businesses have declared losses, some for a number of years, even if they were still operating and expanding production and trade.

Taxation department investigators found out that there have been leaks in official policies, meaning authorities grant investment licences to businesses like MCC but had no concern over the businesses' implementation of investment commitments.

The Ministry of Finance has proposed that the Government and the Ministry of Planning and Investment to refrain from granting investment licences to businesses that are expanding or implementing new projects but have declared losses. However, the proposal still lacks supplements.

Last August, Beri Juker Public Company Ltd. Of Thailand signed a deal to buy all MCC units in Viet Nam for 655 million euro. Under the agreement, the Thai company will own MCC's nationwide business operations, including its 19 distribution centres. The acquisition marks the Thai company's expansion into Viet Nam. — VNS

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