More than half FDI firms in Vietnam report losses
More than 56% of 29,000 foreign direct invested companies in Vietnam posted loss in 2023, which triggered concerns about transfer pricing and tax evasion, according to the Ministry of Finance.
18,100 of them recorded an accumulated loss, the latest report by the ministry shows.
FDI firms’ combined loss went up 32% that year to VND217.46 trillion (US$8.5 billion).
Their revenue fell 4.3% to VND9.41 quadrillion, and profit went down 16% to VND337 trillion.
The ministry noticed an increase of 34.5% in registered capital, hitting $39.4 billion that year.
Most of the funding went to small and medium projects.
FDI firms mostly imported parts to assemble and then export to other countries, meaning that they add little value to the products and take advantage of Vietnam’s tax incentives and low labor costs.
The ministry said that many FDI firms have been posting losses for years but they still expand their investment.
Some companies recorded large revenues and profits but paid a modest amount in taxes.
The ministry therefore requested the government to review its policies on FDI.
More examinations are needed to prevent transfer pricing and tax evasion.
Transfer pricing refers to the price that one division of a multinational enterprise charges another division for goods and services provided, particularly when the divisions are established in different countries.
The government needs to examine active FDI projects to discover which ones are ineffective or showing signs of causing negative environmental impact, the ministry said.
By Phuong Dung – VnExpress.net – February 19, 2025