The automobile and car part manufacturing in Vietnam has the transfer pricing rate of 51 percent, the third highest to finance-insurance and textile-garment, according to a survey.
The conclusion has been made by the Vietnam Chamber of Commerce and Industry (VCCI) and the USAID in their recent survey, conducted with a special method on 91 foreign invested automobile manufacturers in Vietnam, the online English-language newspaper VietnamNet said.
The car prices in Vietnam are believed to be the highest in the world. A car in Vietnam is 70 percent more expensive than the same model in Europe or the US and 30 percent more than in other regional countries.
With 30,000 USD, consumers can buy only one car in Vietnam they would be able to buy two in Europe or the US.
Experts believe that foreign invested enterprises begin conducting the transfer pricing as soon as they make investments in Vietnam.
In most of the cases, foreign partners contribute capital to the joint venture in technologies, production lines and equipment, t he prices of which are often declared higher than the real values. However, the Vietnamese partners, incapable of evaluating the modern technologies, cannot prove the frauds.
The frauds committed by the foreign partners allow them to increase their capital in the joint ventures and help them obtain the right for the business management.
The power allows them to remit money back to the holding companies right at the investment moments and later, through the annual depreciation.
Meanwhile, scientists have noted that most of the automobile manufacturers only bring in the out-of-date production or assembling lines to Vietnam.
Declaring the wrong prices for the production lines and equipment is not the only trick by foreign manufacturers. They also conduct the transfer pricing through the technology transfer, royalties and especially through the imported car parts.
As they declare the prices of car part imports higher than the real values, they can easily make up the higher production costs and lower profits than the real costs and profits.
The declared low profits can help the manufacturers reduce the tax sums they had to pay to the state. Meanwhile, their holding companies can make fat profits from the car part sale.
The report by the VCCI and the USAID said 20 percent of foreign invested enterprises admitted their transfer pricing behaviour.-VNA
The conclusion has been made by the Vietnam Chamber of Commerce and Industry (VCCI) and the USAID in their recent survey, conducted with a special method on 91 foreign invested automobile manufacturers in Vietnam, the online English-language newspaper VietnamNet said.
The car prices in Vietnam are believed to be the highest in the world. A car in Vietnam is 70 percent more expensive than the same model in Europe or the US and 30 percent more than in other regional countries.
With 30,000 USD, consumers can buy only one car in Vietnam they would be able to buy two in Europe or the US.
Experts believe that foreign invested enterprises begin conducting the transfer pricing as soon as they make investments in Vietnam.
In most of the cases, foreign partners contribute capital to the joint venture in technologies, production lines and equipment, t he prices of which are often declared higher than the real values. However, the Vietnamese partners, incapable of evaluating the modern technologies, cannot prove the frauds.
The frauds committed by the foreign partners allow them to increase their capital in the joint ventures and help them obtain the right for the business management.
The power allows them to remit money back to the holding companies right at the investment moments and later, through the annual depreciation.
Meanwhile, scientists have noted that most of the automobile manufacturers only bring in the out-of-date production or assembling lines to Vietnam.
Declaring the wrong prices for the production lines and equipment is not the only trick by foreign manufacturers. They also conduct the transfer pricing through the technology transfer, royalties and especially through the imported car parts.
As they declare the prices of car part imports higher than the real values, they can easily make up the higher production costs and lower profits than the real costs and profits.
The declared low profits can help the manufacturers reduce the tax sums they had to pay to the state. Meanwhile, their holding companies can make fat profits from the car part sale.
The report by the VCCI and the USAID said 20 percent of foreign invested enterprises admitted their transfer pricing behaviour.-VNA
