VietNamNet Bridge – Honda Vietnam has announced that it would reconsider the production and business plan in Vietnam in the future, in case it has to pay the tax arrears of 160 million dollars, or 3340 billion dong. Meanwhile, the Japanese Embassy has come forward and asked Vietnamese competent agencies to reconsider the tax imposition.

Thoi bao Kinh te Vietnam has quoted the statement by Honda Vietnam, a joint venture between Japanese Honda Group and a Vietnamese partner, as saying that Honda Vietnam would reconsider its investment plan in Vietnam, in case it is forced to pay the tax arrears.

The decision on collecting tax arrears has been released after the Hanoi Customs Agency and the Vinh Phuc Customs Sub-agency took a planned inspection tour. Especially, taxation bodies have been insisting on collecting the tax arrears even after Honda Vietnam sent a dispatch to competent agencies to protest the decision.

Explaining the decision to collect tax arrears, tax officials said that they have found the differences in the tax sums Honda Vietnam paid for the car parts imported in the last five years, and the tax sums it should have paid.

Honda Vietnam has sent a dispatch to Vietnamese Deputy Prime Minister, Hoang Trung Hai, asking the Deputy Prime Minister to take strong instructions to relevant ministries and branches on the issue.

In the document sent to Hai, Honda Vietnam emphasized that the decision to collect tax arrears is not unreasonable.

Currently, Vietnam’s import tariff on car parts has been designed on the principle that the car part imports with the higher level of separation can enjoy lower import tariff. The policy aims to encourage local automobile production and restrict the imports of ready made sets of car parts for domestic assembling.

The problem here is that the understanding of Honda Vietnam and customs agencies about the separation levels of the imports of Honda Vietnam is quite different.

In the dispatch sent to the Deputy Prime Minister, Honda Vietnam recalled its achievements in the last 15 years and its big contribution to the national economy. It has churned out 10 million motorbikes, more than 20,000 cars, created 100,000 jobs and paid 20 trillion dong in tax every year.

According to Thoi bao Kinh te Vietnam, right after receiving the dispatch from Honda Vietnam, Deputy Minister Hoang Trung Hai has assigned the Ministry of Finance to collect data and report about the case to him.

While waiting for the final decision from the government, Japanese Chargé D'affaires in Vietnam, Hiroshi Kitamura, sent a letter to leaders of the Ministry of Finance, the General Department of Customs and relevant departments of the Ministry of Industry and Trade, asking to settle the problems with Honda Vietnam.

In the letter, Mr Hiroshi Kitamura said that Honda Vietnam is facing big difficulties due to the decision by management agencies on the tax arrears collection. Honda Vietnam has stressed that there is difference in the understanding of the laws between Honda Vietnam and customs agencies.

Honda is one of the key enterprises in car and motorbike manufacturing, which has been making a great contribution to the development of Vietnam’s economy. He has expressed his worry that the taxation as decided by the customs agencies will badly affect the production and business of Honda Vietnam.

He has emphasized that this would also influence to the whole car manufacturing industry in Vietnam, and affect the investment decisions by Japanese investors.

He thinks that the thing that needs to be done now is to stop the taxation and ensure enough time for an open dialogue between the two parties.

Honda Vietnam is not the only enterprise which has to pay tax arrears for the car part imports. Ford and Toyota once sent documents to relevant ministries about the arguments relating to the tax rates.

C. V