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Truong Hai Auto Corporation, the largest local automobile maker in Vietnam, has asked the government to extend their deadline for an outstanding import tax debt of $57.7 million.
The Vietnamese government is now working on the proposed tax extension for Vietnam’s domestic auto-maker for a sum worth VND1.2 trillion ($57.7 million) from July 1, 2013 to June 30, 2014. Previously, in early June the Ministry of Finance (MoF) sent a document to the government to report the corporation’s proposal.
Truong Hai Corporation, which is the first and the only company in Vietnam producing, assembling and distributing all kinds of commercial vehicles and passenger cars, is being supported by Quang Nam province’s authorities where four companies owned by Truong Hai reside, including Chu Lai Truong Hai Auto, Truong Hai Bus, Truong Hai-Kia Coach and Vina-Mazda. A MoF source said that pursuant to current regulations, the corporation’s proposal was feasible, even for $75 million.
According to the MoF’s document, Quang Nam authorities and Truong Hai Corporation explained that the national economic situation had led to sales dropping strongly for automobile manufacturers across the globe.It has been reported that the corporation has an inventory worth more than VND3.3 trillion ($158.6 million), while it owes about VND5.6 trillion ($269.2 million) to credit institutions.
Quang Nam province also called for the government to support Truong Hai as it is a young domestic manufacturer trying its hardest to become competitive, especially before 2018 when the country is planning to fully join the ASEAN Trade Freedom Agreement that will lead to import tax cuts, encouraging regional manufacturers to enter the Vietnamese market.
Without investment, the company may collapse, resulting in the loss of thousands of jobs, they warned.
According to the Law on Tax Administration and Decree106/2010/ND-CP, taxpayers will be allowed to extend tax payments in case of facing special difficulties. The tax extension must be approved by the government, under the MoF’s proposal.
Therefore, the MoF proposed that the government consider the tax extension for Truong Hai Auto if the corporation can provide a guarantee of support from commercial banks and promises that it would continue investing in automobile manufacturing in the future. Quang Nam Provincial People’s Committee would be responsible for managing and ensuring the money is used for the right purpose.
Last year, Truong Hai corporation produced 24,500 vehicles with a total revenue of VND12 trillion ($571.4 million), contributing VND2.8 trillion ($133.3 million) to the state budget. The corporation expects to provide 29,500 vehicles this year with a revenue of VND13 trillion ($619 million).