Hot-rolled steel produced by FHS. (Photo: hatinh.gov.vn)
Vietnamese customs authorities have suspected Formosa Ha Tinh Steel Corporation (FHS) of transfer pricing following consecutive violations of the Taiwanese-invested firm, according to the Tuoi Tre (Youth) newspaper.
Local authorities have retrieved some two trillion dong (nearly $100 million) worth of taxes from FHS, including 1.55 trillion dong ($65.3 million) for misuse of tax refund papers.
The General Department of Vietnam Customs has recently decided to collect 5.5 billion dong ($246,000) worth of import and value-added taxes.
FHS has been importing a wide array of machinery and equipment for the construction of the steel and deep-water port complex in the central coastal province of Ha Tinh. However, the firm has not declared the true value of the imported items, said Pham Tien Thanh from Ha Tinh Customs Department.
A tax inspector was quoted as saying that virtually raising the value of imported items is aimed for increasing depreciation costs. This practice leads to prolonged losses, thus helping the company evade corporate income tax.
In addition, FHS has continually increased the investment capital of the steel complex since it started operation in Vietnam eight years ago. The capital was hiked from $2.7 billion in 2008 to $7.88 billion in 2010 and $10.55 billion in mid-2015.
The capital hikes lead to suspicion that FHS has untruly declared the value of imports through offshore contractors, according to the tax inspector.
FHS has made headlines in local and foreign media for allegedly heavily polluting the surrounding waters through an undersea wastewater discharge pipe. Tons of fish and seafood have washed up along the coast in the central region.