Metro
Cash Carry Vietnam has been required to report its transaction
with Thailand’s Berli Jucker Public Company Limited (BJC) to the HCMC
Tax Department, a move which is aimed at taxing the asset transfer.
Until now the HCMC Department of Planning and Investment, the unit
overseeing Metro Vietnam’s investment activity, has not received any
official document on the transfer of Metro wholesale centers to the Thai
firm at a value of 655 million euros, while and the tax department has
not got transfer papers from Metro. All information about the
transaction these two State agencies have learned comes from news
reports.
In fact, the deal to sell all 19 wholesale centers to BJC was reached
in Germany more than two weeks ago and both sides are set to close the
transaction in next year’s first half. Therefore, Metro and BJC still
have a long way to go to finish all transfer procedures.
However, according to the tax department, if the deal generates
earnings, Metro would definitely have to pay corporate income tax under
Circular 123/2012 of the Ministry of Finance.
In the case of Metro, there has been no detailed report and management
agencies have not been able to affirm whether Metro is subject to the
transfer tax or not.
Based on the official press statement Metro sent to the media in
Vietnam and Germany, the transaction was valued at 655 million euros.
Analysts said such a figure cannot be false unless Metro and BJC have a
tacit agreement to revise down the amount to a smaller one or a number
equivalent to Metro’s investment amount in Vietnam to evade transfer
tax.
A tax official said she does not think BJC will declare a lower
transfer value, which would force it to pay high tax if it transferred
the store chain on to another.
So what is important is to establish the total investment amount by
Metro in its 19 wholesale centers and the related real estate portfolio
in Vietnam in the past 12 years. Such a figure has not been officially
announced by Metro.
Aggregate investments of Metro in the 19 wholesale centers in Vietnam
had amounted to over US$300 million as of May 2013. There has not been
updated statistics when Metro announced its transaction with BJC but
observers said investments since then are not considerable as economic
difficulties in the country since 2012 have left an impact on most
distributors.
Metro Cash Carry Vietnam’s charter capital was only around US$103
million at that point of time. Therefore, the differential between the
transfer value and the estimated investments in Vietnam of Metro is
around US$578 million.
Nevertheless, costs related to the transfer need to be identified in order to know the transfer tax amount Metro has to pay.
According to lawyer Le Thanh Kinh, head of Le Nguyen Law Office, if the
aforementioned transfer price and investment amounts are accurate,
Metro will have to pay a big tax amount (around 20%).
SGT/VNN