Hyundai-Vinashin faces tax burden

Hyundai-Vinashin shipbuilding joint venture is entering rough seas with a looming tax wave to break on its bow.

The Khanh Hoa-based shipbuilder late last month sent a document to Prime Minister Nguyen Tan Dung pleading for a timeline extension for paying a $3.37 million tax bill. A half-completed $42.9 million shipbuilding project, cancelled by Germany’s Twelfth Phoenix Shipping, is responsible for the trouble.

Under the contract, Hyundai-Vinashin would have delivered the 56,000 dead weight tonne vessel on November 30, 2011, but the German company cancelled the contract three months earlier. “The main reason for this cancellation is that the global shipping industry has been badly affected by global financial crisis,” said Lee Young Hoon, general director of Hyundai-Vinashin.

Hoon said the shipbuilder had unsuccessfully attempted to sell the uncompleted vessel to another customer at a low price. “Due to global economic difficulties, seeking a new customer for this project is very difficult,” Hoon said. In November 2011, Hyundai-Vinashin unsuccessfully pleaded for a tax payment extension from the Ministry of Finance.

The shipbuilder has paid $2.96 million out of $3.37 million in import and value-added tax for this project. And it has to pay more $410,000 in tax arrears. In the document sent to the prime minister, Hyundai-Vinashin said it wanted to delay paying remaining $410,000 of taxes.

The company has asked the prime minister to order Khanh Hoa Tax Department to refund $2.96 million that it already paid. Hyundai-Vinashin pointed to Decree 106/2010/ND-CP issued on October 28, 2010 regulating that the prime minister had the right to extend tax payment timelines for enterprises facing special difficulties.

Hyundai-Vinashin, a joint venture between South Korea’s Hyundai Group and Vietnam Shipbuilding Industry Group, was initially a ship-repair factory. However, the company had to shift into the shipbuilding business after polluting the local environment with copper slag used in ship repairs.

vir

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