CanCham - Canadian Chamber of Commerce in Vietnam

Finance

TWM Markets in Review in November

Economic and Market Highlights in November 2013: Strong GDP headline in the US but the quality of growth is poor. The European Central Bank cuts administered rates. Manufacturing improves in Germany but weakens in France, and consumer confidence improves in Germany and Italy, but erodes in France. In Japan the recovery continues but “Abenomics” may be losing its allure. In the UK there are signs the labor market is gradually tightening. Stocks were mostly higher, with support from strengthening investor conviction that easy monetary policy isn’t going to disappear any time soon. Government bonds were mostly bid In November. JPY has topped 102 for the first time since May. AUD has dropped below 0.91 for the first time since early September. And CAD is flirting with 1.06 for the first time since 2010. (read more)

 

KPMG Technical Update - October 2013

Please click HERE for KPMG Technical Updates on CIT, Anti-money laundering, and more.
 

DFDL Tax Alert: Vietnam set to clamp down on tax treaty abuse

Vietnam is set to be the latest country in the Asia-Pacific Region to introduce General Anti-Avoidance Rules (“GAAR”) into domestic tax laws.

GAAR are statutory provisions designed to combat tax avoidance arrangements.  GAAR can empower the tax authorities to disregard tax avoidance arrangements and subject the transactions to tax using a substance over form approach.  Most countries have adopted similar anti avoidance laws. 

A new draft circular issued by the Ministry of Finance provides that GAAR will apply in respect to claiming of tax treaty benefits in Vietnam.

The draft circular will replace the existing DTA implementation circular (133/2004/TT-BTC). It provides that tax treaty benefits can be denied by the Vietnamese tax authorities if:

·  The main purpose of an agreement or structure is to obtain treaty benefits; or 

·  It is determined that the person receiving treaty benefits is not the beneficial owner of the income.

Although not yet a full OECD member, Vietnam will likely follow the OECD definitions on ‘beneficial ownership’ and ‘residency.’
 

A “substance over form” approach will be adopted under the circular. This allows for beneficial ownership to be challenged if the applicant:

·  will distribute the majority of its profit to a third country within 12 months of receipt of the income. 

·  does not carry out any particular business operations except for the ownership of the assets or the right to generate income.

·  has assets, and the size of business or number of employees does not align with the amount of income received. 

·  does not have any power, control or has low risk over the assets and income. 

·  has a back-to-back agreement for lending, royalty or a technical service agreement with a third party. 

·  is a resident of a jurisdiction with low or no taxes. 

·  is an intermediary solely formed for obtaining treaty benefits. 

Further under the draft circular, where a taxpayer fails to submit an application dossier for tax treaty benefits within three years from the tax payment due date, the treaty benefits will be forfeited.

If the circular will be passed as drafted, we recommend that all existing structures and arrangements in Vietnam be reviewed.

For further information on how these rules may impact on your existing structure, please feel free to contact one of our experienced tax professionals:

- Tax Partner Jack Sheehan,  This e-mail address is being protected from spambots. You need JavaScript enabled to view it

- Tax Director Bernard Cobarrubias,  This e-mail address is being protected from spambots. You need JavaScript enabled to view it  

- Tax Senior Manager Phan Thi Lieu,  This e-mail address is being protected from spambots. You need JavaScript enabled to view it  

 

KPMG Tax Alert - Decree 129 on tax administrative penalties

The Government has issued Decree 129/2013/ND-CP dated 16 October 2013 to replace Decree 98/2007/ND-CP dated 7 June 2007 and Decree 13/2009/ND-CP dated 13 February 2009 on penalties for tax administrative violations.Below are some notable changes under Decree 129:

  • The status of limitations for sanctioning is still two (2) years for tax procedures and five (5) years for tax under-declaration, counting from the date the act of violation is committed to the date of the penalty sanctioning decision. Under Decree 98, it is counted from the date the act of violation is committed to the date of tax audit minutes.
  • Past the statute of limitations for sanctioning tax-law violations, a violator is not sanctioned but still must pay the additional tax liabilities to the State Budget. The limitation for collection of outstanding tax is 10 years, from the date when the violation is discovered.
  • Tax under-declaration discovered by the tax authorities is subject to administrative penalties of 20%

Please click here for English version.

 
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