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Da Nang rejects Coca-Cola expansion proposal

Da Nang rejects Coca-Cola expansion proposal

Thursday, December 13, 2012, 11:37 GMT+7

Coca-Cola Vietnam proposed to expand production of its Da Nang-based manufacturing plant in early Ocotber, but the city’s People’s Committee has turned down the demand. During a meeting with the city’s authorities, the soft drink manufacturer suggested it be allowed to lease a 4,700-square-meter land plot next to its current plant in Lien Chieu District to expand production, saying its products are enjoying good consumption in Vietnam, and the central part in particular. Coca-Cola Vietnam has recently undergone scrutiny from local tax authorities over possible transfer pricing, as the company has repeatedly reported losses and has not paid a single penny of corporate income tax due to those losses since its arrival in Vietnam. Moreover, the company is now demanding to lease more land area, yet it has only covered two-thirds of the 40,000-square-meter land plot it leased from the city. In response, Da Nang authorities said they appreciate the wish to expand production of Coca-Cola Vietnam, but added that the demand will not be accepted. Da Nang has created all necessary conditions for Coca-Cola to establish investment in the city, but has so far collected modest tax payments from the company, the authorities said. “So Da Nang will have to review the effectiveness of Coca-Cola Vietnam’s projects to consider leasing more land area to the company,” they said. Vo Duy Khuong, deputy chairman of the city’s People’s Committee, said not only Coca-Cola Vietnam, but all of the other foreign-invested businesses in the city will not be allowed to expand operation if they have a dubious financial status. “The city will not approve any expansion proposals if the companies have engaged in transfer pricing activities,” he said frankly.

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