Reviews for मह क व य
Guest chapter 1 . 10/20/2014
NOTES TO CANDIDATES

• Please write your answers on the answer sheet;
• Please provide logical, concise, practical and to-the-point advice; and
• Please strictly limit your advice to 1,000 words.

1. SCENARIO 1 – CORPORATE INCOME TAX (“CIT”) INCENTIVES

a. Questions

Company A (“the Client”), a wholly foreign-owned company, was incorporated in Vietnam for manufacturing transportation vehicle parts in October 2007 with the total registered investment capital of USD10mil. Company A is located in Industrial Zone (which was established under Decision of the Prime Minister).

• Company A has started operation of manufacturing motorbike parts right in October 2007.
• In August 2008: Company A increased its capital to USD30mil.
•In March 2009: Company A added the distribution business to its Investment Certificate (“IC”), which allows the Company to import the complete parts from overseas for domestic distribution with maximum value of trading at USD4mil.
•On March 2010: Company A increased fixed assets by 50% to introduce the production line of car parts, without revising its IC as the Company explained that the production of car parts was already included in the originally registered business of “manufacturing vehicle parts”.

The General Director (“GD”) of Company A has approached Deloitte with the following concerns:

1. In January 2014, the local tax authority carried out a tax audit at Company A for the tax year 2013 and raised the issue that income from (1) the car part manufacturing and (2) the distribution should not be applied the CIT incentives granted for the motorbike part manufacturing. The GD has asked us whether the tax authority’s statement is correct or not. If it is correct, the GD wonder if there is any reasonable explanation which could help to mitigate the tax risks in this case.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see my/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

2. Recently, the GD also read a tax newsletter from Deloitte and noticed the issuance of Resolution
63/NQ-CP dated 25 August 2014, which provides some favourable treatments to Company A’s circumstance:

-Paragraph 1, Article I.4 regarding “progress investment”;
-Paragraph 2, Article I.4, regarding “continuous increase of fixed assets during 2009 -2013”; and
-Article II.1, regarding “change of incentive of investment project according to law change”

The GD is wondering about the applicability of such provisions to achieve a favourable tax treatment for the tax year 2014.

Assumptions

Company A maintains proper invoicing, declares VAT under the credit method and has been generating taxable income from the operation since 2007 up to now.

b. Guidance

Please draft your answer mainly based on the following regulations:

-Circular 134/2007/TT-BTC dated 23 November 2007;
-Circular 130/2008/TT-BTC dated 26 October 2008;
-Circular 123/2012/TT-BTC dated 27 July 2012;
-Circular 78/2014/TT-BTC dated 18 June 2014; and
-Resolution 63/NQ-CP dated 25 August 2014

We suggest you to structure your answer with following contents: (1) Summary of relevant tax regulations related to the issues (2) Analysis and Responses to each question separately and clearly.

You are also encouraged to extend your researches to further related documents where necessary.

2. SCENARIO 2 – FOREIGN CONTRACTOR WITHHOLDING TAX

Generally, income earned from service provided by a foreign contractor to a Vietnamese organization should be subject to Foreign Contractor Withholding Tax in Vietnam (“FCWT”). However, the prevailing FCWT regulations provide tax exemption to services which are performed and consumed outside Vietnam. At this stage, the determination of location whereby service consumption takes place is grey area under the current Vietnamese tax regulations.

a. Questions

• In your opinion, what are key factors which should be taken into consideration to assess a service is
consumed outside Vietnam.

•Client X, who is a giant civil design company located in Japan, intends to sign a contract with a Vietnamese party to provide design services for a building in Hanoi. All of the design work is performed overseas and Client X shall not assign their expatriates to Vietnam during the implementation of the design work. In your opinion, whether the design service provided by Client X is subject to Vietnamese FCWT and why?

b. Guidance

Please draft your answer mainly based on Circular 103/2014/TT- BTC dated 6 August 2014. We suggest you to structure your answer with following contents: (1) Summary of relevant tax regulations related to the issues (2) Analysis and Responses to each question separately and clearly. You are also encouraged to extend your research to further related documents where necessary.

3. SCENARIO 3 – CUSTOMS

a. Questions

A foreign company (“the Client”) is planning to set up a new business in Vietnam (“the subsidiary”) with details as follows:

•The business is to process the fabrics into garment in exchange for processing fees;
•Apart from the fabrics which would be provided by them to the subsidiary, other sub-materials and supplies (if needed) would be purchased by the subsidiary itself and included in the processing fees.
•All of their products are expected to be exported; and
•There are two locations for the factory under consideration:
Due, An Duong, Hai Phong in Dinh Vu-Cat Hai Economic Zone; and ii. Gian Khau Industrial Zone, Gia Vien, Ninh Binh

As such, the Client would like Deloitte to explore:

1. Can the subsidiary be entitled to duty exemption for its imported fixed assets, and under what conditions and/or procedures?

2. Is there any favorable duty and Value Added Tax (“VAT”) treatment for its imported materials as well as exported products? What is the customs procedure applicable for their business model (i.e. export processing)?

b. Guidance

•Your advice must make reference to the relevant legal bases (suggested below); however, no need to quote the legal base therein.

-Circular 128/2013/TT-BTC dated 10 September 2013;
-Circular 13/2014/TT-BTC dated 24 January 2014; and
-Circular 22/2014/TT-BTC dated 14 February 2014

•Provide pros and cons under different scenario is recommended; and
•Make sure you cover both cases of Export Processing Enterprises (“EPE”) and non-EPE.
Rapunzella chapter 1 . 5/9/2012
Why is this under "The Fantasticks" and not "The Hunger Games"? Try the books section ;-) (As far as I know, no one's written a stage adaptation of The Hunger Games––yet).