The automobile and car part manufacturing in Vietnam has the transferpricing rate of 51 percent, the third highest to finance-insurance andtextile-garment, according to a survey.
The conclusion hasbeen made by the Vietnam Chamber of Commerce and Industry (VCCI) and theUSAID in their recent survey, conducted with a special method on 91foreign invested automobile manufacturers in Vietnam, the onlineEnglish-language newspaper VietnamNet said.
The car prices inVietnam are believed to be the highest in the world. A car in Vietnamis 70 percent more expensive than the same model in Europe or the US and30 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 conductingthe transfer pricing as soon as they make investments in Vietnam.
In most of the cases, foreign partners contribute capital to thejoint venture in technologies, production lines and equipment, t heprices of which are often declared higher than the real values. However,the Vietnamese partners, incapable of evaluating the moderntechnologies, cannot prove the frauds.
The frauds committedby the foreign partners allow them to increase their capital in thejoint ventures and help them obtain the right for the businessmanagement.
The power allows them to remit money back to theholding companies right at the investment moments and later, throughthe annual depreciation.
Meanwhile, scientists have notedthat most of the automobile manufacturers only bring in the out-of-dateproduction or assembling lines to Vietnam.
Declaring thewrong prices for the production lines and equipment is not the onlytrick by foreign manufacturers. They also conduct the transfer pricingthrough the technology transfer, royalties and especially through theimported car parts.
As they declare the prices of car partimports higher than the real values, they can easily make up the higherproduction costs and lower profits than the real costs and profits.
The declared low profits can help the manufacturers reduce the taxsums they had to pay to the state. Meanwhile, their holding companiescan make fat profits from the car part sale.
Thereport by the VCCI and the USAID said 20 percent of foreign investedenterprises admitted their transfer pricing behaviour.-VNA
The conclusion hasbeen made by the Vietnam Chamber of Commerce and Industry (VCCI) and theUSAID in their recent survey, conducted with a special method on 91foreign invested automobile manufacturers in Vietnam, the onlineEnglish-language newspaper VietnamNet said.
The car prices inVietnam are believed to be the highest in the world. A car in Vietnamis 70 percent more expensive than the same model in Europe or the US and30 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 conductingthe transfer pricing as soon as they make investments in Vietnam.
In most of the cases, foreign partners contribute capital to thejoint venture in technologies, production lines and equipment, t heprices of which are often declared higher than the real values. However,the Vietnamese partners, incapable of evaluating the moderntechnologies, cannot prove the frauds.
The frauds committedby the foreign partners allow them to increase their capital in thejoint ventures and help them obtain the right for the businessmanagement.
The power allows them to remit money back to theholding companies right at the investment moments and later, throughthe annual depreciation.
Meanwhile, scientists have notedthat most of the automobile manufacturers only bring in the out-of-dateproduction or assembling lines to Vietnam.
Declaring thewrong prices for the production lines and equipment is not the onlytrick by foreign manufacturers. They also conduct the transfer pricingthrough the technology transfer, royalties and especially through theimported car parts.
As they declare the prices of car partimports higher than the real values, they can easily make up the higherproduction costs and lower profits than the real costs and profits.
The declared low profits can help the manufacturers reduce the taxsums they had to pay to the state. Meanwhile, their holding companiescan make fat profits from the car part sale.
Thereport by the VCCI and the USAID said 20 percent of foreign investedenterprises admitted their transfer pricing behaviour.-VNA
