Timatex Vietnam Co. Ltd. has taken legal action against the HCMC Tax Department over the collection of US$2.8-million tax arrears but it is still open for negotiation to solve the problem.

A representative of Timatex Vietnam speaks at a dialogue with the HCMC Tax Department last week.

Speaking at a dialogue with the tax department yesterday, a representative of the company demanded an explanation of the tax arrears collection.

If the taxman provides convincing evidence, Timatex Vietnam will pay that amount. Otherwise, the department must change its tax collection decision if the firm points out contradictions of Vietnamese tax laws with the double taxation avoidance agreements Vietnam has signed with other countries.

Timatex Vietnam indeed does not want to bring the case to court, the representative said.

In July 2013, the firm got a decision from the tax department over the US$2.8-million contractor tax between 2009 and 2012. It lodged a complaint to the department but then the taxman transferred the case to the police.

Timatex Vietnam worked with the police for a long time but the case could not be solved. So, it decided to sue the tax department, the representative said.

Tran Thi Le Nga, deputy director of the HCMC Tax Department, said this is a complicated case. The court has asked the parties concerned to solve the problem but it has yet to find a solution.

However, the department is ready to meet Timatex Vietnam leaders to deal with the case, Nga said.

Animal feed producers at the dialogue also complained about the problem that has arisen since animal feed was exempted from value added tax (VAT).

Without VAT on finished animal feed, producers cannot ask for VAT refunds on input costs such as electricity, packaging and material. As a result, their selling prices have been revised up to offset those extra costs.

Nga said the department has reported to relevant agencies in order to find ways to support enterprises in the industry.