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Vietnamese boycotting Coca-Cola on the suspicion about transfer pricing

VietNamNet Bridge – The information that Coca-Cola has not paid any dong in
tax over the last 10 years of operating in Vietnam has raised a wave of anger
among Vietnamese.


Vietnam, Coca-Cola, transfer pricing, tax agency, tax evasionVietnamese netizens call on to boycott Coca-Cola’s products

“I have decided not to drink Coca-Cola any more. I feel I need to do so. We
should not accept an investor who enriches in Vietnam, but does not pay tax to
Vietnam,” a doctor wrote on his Facebook.

In fact, Coca-Cola has fallen under suspicion of evading tax for the last many
years because it has been continuously declaring loss over the last many years,
since the day it began operation in Vietnam.

Coca-Cola’s finance reports showed that in 2004, it got the turnover of VND728
billion and took a profit of VND110 billion. In 2006, the turnover soared to
VND1.026 trillion, but the loss was double at VND253 billion.

In 2010, Coca-Cola’s turnover was high at VND2.529 trillion, but the expenses
were VND2.717 trillion, which meant the loss of VND188 billion.

As such, the accumulative loss has climbed to VND3.768 billion, which is even
higher than the initial investment capital of VND2.950 trillion.

Since it repeatedly reports loss, it does not have to pay any dong in the
corporate income tax.

However, the public’s anger has flamed up after local newspapers reported that
on October 26, Coca-Cola announced the new investment plan of $300 million to be
disbursed in the next 3 years. This is a part of the plan to exploit the
Vietnamese market, where Coca-Cola can see great potentials.

Obtaining high growth, taking loss, evading tax, continuing making heavy
investment are what Vietnamese have heard about Coca-Cola so far. The HCM City
Taxation Department stated that it suspects Coca-Cola of making the transfer
pricing and that it would put the drink manufacturer under the probe.

It is estimated that the sum of tax evaded by Coca-Cola over the last 10 years
may reach trillions of dong, because Coca-Cola is holding the biggest drink
market share in Vietnam with very big volumes of products consumed every year.

Vo Duy Khuong, Vice Mayor of Da Nang City, in an interview given to Tuoi tre
newspaper in January 2013, said that he frankly said to Coca-Cola’s
representative at a meeting that the city’s authorities won’t let it to expand
business in the locality because of the behavior of conducting transfer pricing,
that makes the city fail to collect tax from enterprises.

Prior to that, in late 2012, local newspapers reported that Coca-Cola has asked
for the local authorities’ permission to lease another 4,700 square meters of
land in the city, the land plot located next to its existing factory in Lien
Chieu district in Da Nang. The drink manufacturer plans to set up another
production factory on the land, a part of its plan to expand production and
business in Vietnam.

Meanwhile, local newspapers have found out that Coca-Cola still has not used up
the land area of 40,000 square meters allocated to it before, but it still
demands more land.

The refusal by the Da Nang City’s authorities has been applauded by the public.
People believe that this is a necessary treatment to the investors who only try
to make profit for themselves and ignore their duty of paying tax.

Dr. Nguyen Manh Hung, Chair and CEO of Thai Ha Books JSC, has warned that by
trying to evade tax by conducting the transfer pricing, Coca-Cola is “killing
itself.”

“Coca-Cola seems to turn itself into another “Vedan.” Vietnamese consumers will
turn their backs to its products. Meanwhile, it understands that there are many
redoubtable rivals on the market,” Hung said.

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