However, when the sale came to attention of the General Department of Tax of Vietnam ( GDT), it then held TMG liable for capital gains tax (around 6-digit number in amount).īoth above M&A deals share similarities in that: (i) the share acquisition is made entirely outside Vietnam’s territory (ii) the target companies are typical an SPV (i.e. Specifically, TMG would be able to indirectly control all six companies and ultimately the chain of Victoria-brands facilities just in a single transaction. On its side, Madagascar SA, as the seller, would save a huge amount of capital gains tax (and it did) because the deal did not take place in Vietnam. In 2010, Thien Minh Group ( TMG), a local traveling company, agreed to buy EEM Victoria Ltd from Madagascar SA because this arrangement seems to ‘benefit’ both the buyer and the seller. EEM Victoria Ltd then owned 06 separately companies in Vietnam which in turn operate 06 Victoria-brand hotels and resorts throughout the country. In a separate, but related, case, in 1995, Madagascar SA, a French company, set up EEM Victoria Ltd in Hong kong as an SPV to invest in Vietnam.

Because the US$1.14 billion transaction occurred entirely outside Vietnam’s territory, Vietnamese tax authority was about to ‘loose’ a huge amount of capital gains tax and it needs to find a way to get the tax amount. This move came after the Thai conglomerate Central Group acquired Hong Kong-registered Cavi Retail (the direct SPV owner of Big C) from France-based Casino Group. In June 2016, Vietnam’s local authorities in areas where Big C-branded supermarket chain locates were requested to temporarily stop any licensing works relating to the brand’s business.

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