VietNamNet Bridge – Minister of Planning and Investment Bui Quang Vinh plans to meet Irial Finan, vice president of Coca Cola Group this week in Hanoi, one year after Coca-Cola was blacklisted after being suspected of engaging in transfer pricing.

Coca-Cola caught the attention of the public after it announced a plan to expand business in Vietnam, though it has repeatedly incurred losses over the many years, for which it did not pay any Vietnamese dong in corporate income tax.

Vinh, in an interview given to Vietnam National Television (VTV) last year, said taxation bodies found signs of many foreign-invested enterprises (FIEs) engaging in transfer pricing. He named two, Coca-Cola and Adidas.

Vinh said that the FIEs are tarnishing the image of the 14,500 FIEs in Vietnam.

“Vietnam will not accept the fact that Coca-Cola, Adidas or any other FIEs that make profits in Vietnam do not pay any dong in tax,” Vinh stated.

During a working visit to the US, Vinh met with Coca Cola, where he “welcomed Coca-Cola’s decision to expand its investments in Vietnam by pouring $300 million more in the next three years”.

Vinh also asked the company “to regularly provide information to Vietnamese management agencies and make its business activities transparent in Vietnam”.

However, to date, Vietnam still has not made any official decision if Coca-Cola actually engaged in transfer pricing. As such, the Coca-Cola case remains questionable.

Meanwhile, Coca-Cola’s representatives have insisted on their innocence, saying that the group did not engage in transfer pricing to evade tax.

Coca-Cola admitted that it had not paid any dong in corporate income tax, but said it did not make sufficient profits to pay the tax.

However, though Coca-Cola did not pay corporate income tax, it paid $33 million worth of different kinds of taxes from 2008 to May 2013, contributing to the state’s coffers.

At a meeting with the local press in June 2013 in Vietnam, Clyde C. Tuggle, vice president of Coca-Cola stated that Coca-Cola does not engage in transfer pricing.

Meanwhile, Irial Finan, who met with Vinh this week, said with their long-term investment plan in Vietnam, Coca Cola would not do such a thing.

Finan said that it took Coca Cola 127 years to be recognized as the world’s leading drink brand which is worth $80 billion. Therefore, Coca-Cola would not be foolish enough to waste 127 years and its great efforts by engaging in illegal actions to make illicit profits.

He said Coca-Cola understands that everything will be ruined if it did not do business in a serious manner and obey the laws of the host countries.

The senior executive stressed that Coca-Cola Vietnam is ready to receive tax inspectors if the government of Vietnam wants to do this, saying that tax officials who once worked with Coca-Cola Vietnam all admitted that the drink manufacturer always strictly followed accountancy principles.

TBKTVN