How to Overcome the Complexity of the Foreign Contractor Tax in Vietnam

How to Overcome the Complexity of
the Foreign Contractor Tax
in Vietnam
Best Practices, Technical & Practical pitfalls
Legend Hotel
Ho Chi Minh City
7 July 2011
Knowledge that works
www.irvingseminar.com
Introduction
Supplies of goods, services and other income by enterprises without a presence in Vietnam are in nearly all cases subject to the so-called “Foreign Contractor Tax”. This tax collection system covers corporate income tax (“CIT”) and Value Added Tax, but also Personal Income Taxes on income derived by individuals. Engineering and construction
projects carried out in Vietnam, supply of equipment and installation, but even loans
and insurance arrangements will resort under this tax regime. In most cases, the payer of
the income will as far as tax authorities are concerned be liable to deduct the tax at
source, file a tax declaration and pay the tax. Although based on simple principles, the
FCT is fairly complex in practice. Different tax rates and values apply to different business lines. The process of registration and tax filing, which has a significant effect on actual tax liabilities, is not always clear to the enterprises concerned who must register in
which circumstances. Different rules may apply in case a “double taxation agreement”
governs the income that is paid abroad.
As a result, FCT issues are often highly frequent, important and difficult in the business
of many enterprises. An incorrect understanding of the FCT liability may result in penalties, interests or in overpaying taxes that are actually not even due. Enterprises cannot
always engage tax consultants for each and every payment. It is, of course, quite beneficial to enterprises that they dispose over a good understanding of how the FCT applies
to the payments they make. In this detailed one day seminar, well-known experts of the
advisory profession share their valued knowledge and practical experiences with the
course registrants. A detailed course program has been designed to meet the needs of
key staff of enterprises in this regard. The objective is to provide a detailed practical understanding of the application of the tax, so that registrants are able to determine the tax
consequences of real-life cases in their enterprise.
Key Points
 Which withholding taxes apply to construction, installation and supply
of services?
 Split services from equipment or not? Pros and cons
 How to obtain exemptions based on the double taxation agreement?
 Pan Special issues for assigning staff and management fees
 Onshore and offshore services: common pitfalls and how to avoid them
 Does the FCT apply when the payment is made from abroad?
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Program
08:15 Registration
09:00 - 10:00
Recent GDT interpretations on FCT
10:00 - 11:00
Problems related to
expatriate employees
of foreign contractors
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Ruling overview and discussion
GDT interpretation of permanent establishment
Tax planning opportunities
Baker & McKenzie
Nguyen Thanh Vinh
Tax Partner
EP Legal
Tony Nguyen
Managing Director
Registration and declaration requirements
Who is exempt?
Official development Aid project
How to fix part non compliance
DTA exemption in practice
Refreshment
11:30 - 12:30
Payments for onshore
and offshore services:
pitfalls and tax planning
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Which services are exempt of FCT
What is use outside Vietnam
How does the DTA impact onshore and offshore services
Ernst & Young
Huong Vu
Tax Partner
Consulting fees and supervision of construction and installation
Lunch Break
14:00 - 15:30
Case studies on FCT
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Deloitte
Tom McClelland
Tax Partner
Franchising
BOT
Oilfield services
Management consulting
Leasing of equipment
Refreshment
16:00 - 17:30
DTA
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What to do if the GDT rejects your DTA exemption
Practical experiences on DTA situations
Mutual agreement procedures
Documentation process: How to improve your position
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DFDL
Edwin
Vanderbruggen
Tax Partner
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Speakers &
Panelists
Speakers
Nguyen Thanh Vinh
Tax Partner
Mr. Tony Nguyen
Managing Director
Ms.Huong Vu
Tax Partner
Ernst & Young Vietnam
Mr. Tom McClelland
Partner-Tax Partner
Mr. Edwin Vanderbruggen
Partner
Head of Indochina
Tax Practice
Vinh practiced tax and consultancy work for two international accounting firms for eight
years and worked as a compliance counsel for an international insurance company before
joining the Ho Chi Minh City office of Baker & McKenzie. He focuses on tax advice and
planning on corporate and individual tax issues, banking & finance, and other general corporate matters. Mr. Nguyen is a member of the Bar Association of Ho Chi Minh City. He
holds a Bachelor of Arts degree in English from the University of Ho Chi Minh City and an
LLB from the University of Law of Ho Chi Minh City
Tony practices in the area of commercial transactions advice and common law on contracts with a heavy emphasis on international trade law, shipping law, marine insurance
and offshore petroleum transactions. Prior to joining EPLegal in 2009 Tony had worked in
legal and contract managerial positions in several giant oil and gas corporations such as
PTSC, PVTrans and Cuu Long Joint Operating Company. Tony has legal and contracting
experience through various projects related to drilling campaigns; oil and gas development and production operations; sales and purchasing and technical services contracts;
chartering of vessels/FPSO/FSO; production services; and EPC/EPIC offshore construction
contracts.
Ms.Huong Vu is a Tax Partner of Ernst & Young Vietnam. She has 15 years experience in
tax and accounting industries. She has actively involved in assisting a diverse range of clients on tax matters, including corporate taxation, value added tax, foreign contractor tax,
foreign exchange and financial issues. Huong Vu is particularly in-depth understanding of
local regulatory system and various tax and investment regulations. She has expertise in
advising on indirect tax issues, including customs duty, value added tax, and special consumption tax. She is leading a team of dedicated indirect tax professionals to provide a
seamless, consistent service throughout the country and deal effectively with cross border
issues.
Tom McClelland has over 17 years’ international tax experience including a total of six
years in Vietnam, over a period beginning in 1998. In this time he has provided his multinational and local clients with the full range of tax consulting and compliance services.
Tom specialises in the taxation of investment funds and real estate both in Vietnam and
internationally.In Vietnam he has advised a large number of offshore and local funds on
structuring their real estate investments and currently provides the
full range of tax services to a number of foreign invested real estate projects. Tom holds a
Masters in Finance from London University and an honours degree in law from Victoria
University of Wellington. He is admitted as a Barrister and Solicitor of the High Court of
New Zealand.
Mr. Edwin A. Vanderbruggen has 17 years experience as a tax lawyer and academic. He
advises multinational enterprises, governmental departments and international organizations in the field of international taxation, tax planning and on the public international law
of trade & investment. Besides extensive tax consulting work for multinational enterprises
he has regularly trained and assisted tax department officials in various countries, designed policy and drafted tax laws and regulations and has supplied expert testimony to
tax courts. He has also trained and advised governmental agencies on international trade/
investment law and arbitration.
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Registration
Please register the following delegate (s) for the conference on:
HOW TO OVERCOME THE COMPLEXITY OF THE FOREIGN CONTRACTOR TAX IN
VIETNAM
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CONFERENCE DATE
Ho Chi Minh City,
Thursday 7 July 2011 09 :00 - 17:30
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