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Foreign-invested businesses top all others in 2014 social insurance debt in Vietnam: report

Monday, May 25, 2015, 10:05 GMT+7

Foreign-invested enterprises (FIEs) and foreign organizations last year topped all other economic sectors of Vietnam’s economy in social insurance debt with over VND2.13 trillion (US$97.9 million), according to a government report on the management and use of social insurance funds in 2014.

This was a staggering 192.5 percent year-on-year surge, according to the report submitted recently to the ongoing National Assembly meeting, which kicked off in Hanoi on Wednesday.

The foreign sector was followed by the non-state sector which owed about VND1.9 trillion ($87.4 million), down about 50 percent compared to the rate of over VND3.8 trillion in the previous year.

The non-state sector held the top position in social insurance debt in 2013 as the debt it owed accounting for about 16 percent of total social insurance debts that should be recovered, according to the report.

In general, the government said in the report that the balance of the country’s social insurance fund in 2014 was at VND305.8 trillion ($14 billion), up 24.7 percent compared with 2013.

Meanwhile, social insurance debt topped VND5.58 trillion ($256.7 million), down 10.8 percent compared with 2013.

Though FIEs have contributed a great deal to the local economy since they first established a foothold in the country in the 1990s, many operating in Vietnam have been found, or were suspected of, being involved in transfer pricing and tax dodging.

Metro Cash & Carry Vietnam (MCC) was the most recent case after being asked to pay almost $3 million in tax arrears to the state budget in April following a two-month inspection launched by Vietnamese taxation authorities. 

The firm began coming under scrutiny on suspicions of transfer pricing in 2012.

Many Vietnamese tax agencies had tried to clarify the transfer pricing dispute of the company but failed to find any wrongdoings until the General Department of Taxation launched its own inspection.

Also in April, Deputy Minister of Finance Do Hoang Anh Tuan said at a government meeting that Honda Vietnam Co. Ltd. was asked to pay an additional VND200 billion ($9.32 million) in tax arrears and fines.

In fact, tens of FIEs have allegedly conducted transfer pricing since 2009. Though those enterprises have repeatedly reported losses, they have continued to upgrade their bases in Vietnam.

There are many well-known names on the “blacklist” of Vietnamese taxation authorities including Big C, Unilever, Coca-Cola, Pepsi, and Adidas.

However, the names were only orally handed down, while they did not appear in official reports released by state management agencies, according to news website VietNamNet.

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