The administrative lawsuit between Coca-Cola Vietnam Beverage Company Limited and the Ho Chi Minh City Tax Department concluded on 27/11, after several days of proceedings at the Ho Chi Minh City People's Court.

The dispute originated from a decision issued on 25/12/2019 by the General Director of the General Department of Taxation. This decision penalized Coca-Cola Vietnam for administrative tax violations, citing incorrect declarations and underpayment of required taxes.

The penalty included the collection of 471 billion VND in back taxes, specifically over 60 billion VND in value-added tax, over 359 billion VND in corporate income tax, and 51 billion VND in tax paid on behalf of foreign contractors. Additionally, the company was assessed 288 billion VND in late payment penalties, calculated up to 16/12/2017. The total amount Coca-Cola Vietnam was ordered to pay in back taxes and penalties amounted to 821 billion VND.

On 9/1/2020, Coca-Cola Vietnam filed a partial complaint against the decision. The complaint specifically challenged the collection of corporate income tax and value-added tax related to promotional products, refrigerators supplied to organizations and individuals, fixed assets like bottle cases and plastic crates, and some machinery warranty costs. The company argued that it had not been able to provide sufficient documentation for these items. However, the General Department of Taxation subsequently issued an initial decision resolving the complaint, rejecting Coca-Cola Vietnam's arguments and upholding the original penalty and tax arrears decision.

Consequently, on 26/5/2022, Coca-Cola Vietnam escalated the matter by filing a lawsuit. The company requested the Ho Chi Minh City People's Court to annul the General Department of Taxation's administrative penalty decision, which demanded 821 billion VND in taxes, and to partially annul the Tax Department's initial complaint resolution decision against the company.

A Coca-Cola factory located in Ho Chi Minh City. Photo: Coca-Cola Vietnam

**Tax Department: Inspections and decisions align with legal regulations**

In documents submitted to the court, the Ho Chi Minh City Tax Department highlighted that Coca-Cola Vietnam's financial reports showed a consistent pattern of unprofitable operations over 22 years, from 1994 to 2015. Despite these reported losses, the company's business activities and net revenue demonstrated steady growth. For instance, net revenue increased from 197 billion VND in 2001 to 592 billion VND in 2004, 1.132 billion VND in 2008, 3.412 billion VND in 2012, and reached 6.824 billion VND by 2015.

Despite this consistent revenue growth, Coca-Cola Vietnam reported losses for many consecutive years. This resulted in the company paying no corporate income tax to the State budget for 21 years, with the first payment of 115 billion VND only occurring in 2015.

These discrepancies prompted the General Director of the General Department of Taxation to initiate a tax inspection of the company for the 2007-2015 period, with decisions issued in 2016 and 2017. The Tax Department noted that despite granting extensions for explanations as requested by Coca-Cola Vietnam, the company prolonged the provision of necessary documents to the inspection team. This delay hindered the timely drafting of the administrative violation report and the issuance of the penalty decision.

The General Department of Taxation's inspection team finalized the tax inspection report for the company on 17/12/2019. Following the conclusions of this report, the General Director of the General Department of Taxation issued the penalty decision and the initial complaint resolution decision against Coca-Cola Vietnam. The General Department of Taxation affirmed that both the inspection process and the subsequent issuance of these decisions were carried out in accordance with proper procedures and legal regulations. The agency requested the court to reject all of Coca-Cola Vietnam's claims.

After thorough deliberation, the court panel rejected Coca-Cola Vietnam's lawsuit, which sought to annul the administrative penalty decision to collect 821 billion VND in taxes and to partially annul the Tax Department's initial complaint resolution decision. The court panel determined that the tax authority's decisions were issued in accordance with legal regulations. During the trial, Coca-Cola Vietnam argued that some aspects of the tax authority's decisions were inappropriate but failed to provide evidence to support its claims.

Following the court's verdict, Coca-Cola Vietnam stated that it respects the judicial process and the Ho Chi Minh City People's Court's ruling regarding the tax case. The company is currently reviewing the next steps in the lawsuit, while reaffirming its commitment to full compliance with tax obligations and legal regulations in Vietnam.

Coca-Cola entered Vietnam in 1994, becoming one of the first American businesses to invest in the country after the normalization of relations between the two nations. In recent years, the company has invested 136 million USD to build a new factory in Tay Ninh province, expressing its desire to continue contributing to Vietnam's development.

Hai Duyen