By Le Khanh Lam - Partner, Tax and Consulting RSM Together with the increment of foreign direct investment capital in Vietnam and cross-border transactions of selling goods and providing services by foreign suppliers to Vietnamese buyers, the concerns regarding the Foreign Contractor Tax and the control of transfer pricing that could affect these transactions have accordingly increased. Foreign Contractor Tax implications In Vietnam, the Foreign Contractor Tax (FCT) describes the tax obligations of overseas contractors who do business in or receive income from Vietnam on the basis of a contract or agreement with Vietnamese buyers. The FCT mainly comprises of two components, those being VAT and income tax. In which, VAT and Corporate Income Tax (CIT) applies to a foreign contractor who is an overseas business entity; and VAT and Personal Income Tax (PIT) applies to an individual business foreign contractor. Currently, the direct method is the common method applied by most … [Read more...] about Tax implications of cross border trade
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In order to promote green growth, many countries have employed tax instruments aimed at reducing carbon dioxide, which causes the greenhouse effect and stimulates climate change, applied clean production methods, developed green technologies and industries using little resources, and so on, to force manufacturers to include environmental protection costs into the prices of their end products. Following this trend, Vietnam has been pursuing a tax policy that targets green growth and sustainable development by encouraging investment in green-technology and energy-saving production methods while raising the awareness on environmental protection. However, research by the Central Institute of Economic Management shows that environmental taxes in Vietnam currently account for just 0.24% of GDP, compared with 1.33% in China, 1.48% in Japan and 2.54% in the Republic of Korea. In fact, current tax preferential policies are not strong enough to encourage green production and consumption. … [Read more...] about Boosting green growth with tax instruments
Tax challenge to continue in New Year, Source: AFP/File | Damien Meyer Several days before the Law on Cybersecurity comes into effect on January 1, 2019, Facebook remained silent about its plan to open a representative office in Vietnam, but a Google representative told VIR, “There are a number of factors we need to look at before opening an office, and we have nothing to announce at this time.” Discussing the issue with VIR, economist Vu Sy Cuong, who has long experience in financial analysis and research, said that the establishment of representative offices depends on the decree outlining the specifics of the Law on Cybersecurity, which is currently being drafted. “Without the decree providing guidelines on implementation, the Law on Cybersecurity coming into effect will not be able to force firms to establish representative offices in Vietnam,” Cuong added. The latest draft of the decree is currently collecting opinions for further fine-tuning, which is … [Read more...] about Tax challenge to continue in New Year
The Viet Dragon Securities Company (VCSC) has forecast a bleak outlook on sluggish sales and rising input costs for Hậu Giang Pharmaceutical Joint Stock Company (DHG). The company has downgraded the potential growth of DHG to 'Underperform', VCSC said in its report. VCSC predicts that the compound annual growth rate (CAGR) of DHG’s after-tax profit in the 2017-2020 period would stand at only 3 per cent per year. In the first quarter of 2018, DHG’s in-house sales slid 4 per cent year-on-year, VCSC said, adding that amid stiff competition in the over-the-counter (OTC) channel, DHG still lacks distinctiveness in its products. OTC or over-the-counter means distributing drugs through drugstores. “We have not seen enough changes in DHG to overcome the headwinds in the OTC channel.” DHG’s past success was premised on its market-leading distribution network. However, its sales of in-house products have stalled over the last four years as DHG’s … [Read more...] about VCSC downgrade local pharmacy firm
Handing over the right of prosecution and investigation to tax authorities may halt tax evasion? Authorities powerless in face of tax evasion by foreign firms In reality, despite the fact that foreign firms are acquiring massive annual revenue and profit from their operations in Vietnam, the local government faces difficulties in collecting tax from them, as could be seen with the examples of Uber and booking sites Agoda, Booking.com, and Traveloka. A number of these enterprises have been delaying tax payments, while others took advantage of loopholes to evade tax obligations. Notably, in late January 2017, the Ministry of Finance (MoF) asked booking sites that allow tourists to book hotel rooms in Vietnam to calculate and pay VAT and CIT. Targeted websites include Agoda, Traveloka, Booking, and Expedia. The CIT rate is 5 per cent of the total revenue. VAT is calculated on the added value that the companies, called “the foreign contractor” by the ministry, make. MoF … [Read more...] about Extending mandate of tax authorities may halt tax evasion?