The British-American Tobacco Vinataba (BAT–Vinataba) will be fined up to VND91 billion (US$4.6 million) for violating tax obligations, according to the Dong Nai Province tax department.
BAT Vinataba will have to pay corporate income tax of VND263 billion ($12.1 million) owed in the 2006-08 period, the department said.
According to the department, BAT Vinataba was exempted from paying business income tax for the first two years when the business began generating profit. It then received a 50 per cent reduction in tax payments for the next three years.
In return, BAT Vinataba agreed to buy tobacco from local companies and imported tobacco.
After seven years of operation, it also had to use at least 40 per cent of material sourced from local companies only, according to the Ministry of Planning and Investment.
BAT Vinataba also were supposed to help farmers plant tobacco with advanced technology and sign contracts to buy tobacco from them.
However, the company has not met these conditions.
BAT Vinataba did not buy tobacco from farmers as contracted, and instead purchased tobacco from local companies. In addition, the company did not offer advanced technology instruction to tobacco farmers.
In 2008, BAT Vinataba spent VND2.7 billion ($138,000) for the training of farmers. But that was the only obligation it met.
The tobacco BAT Vinataba bought from domestic companies did not reach 40 per cent of all the materials for production, as required under the licence.
The Tax Department said BAT Vinataba did not meet its obligations and, thus, was not eligible to receive tax exemption or reductions, as stipulated under its licence with the Ministry of Planning and Investment.
BAT Vinataba has appealed the decision to the Dong Nai Province People’s Committee.
Dong Nai Tax Department has urged the People’s Committee to impose a high fine on BAT Vinataba.