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Compliance & Investigations Brochure
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Vietnam Legal Update: Proposed New Solar Feed-In-Tariff
On 22 February 2019, the Ministry of Industry and Trade of Vietnam (the “MOIT”) publicized a draft Decision (the “Draft Decision”) that will replace Decision No. 11/2017/QD-TTg issued by the Prime Minister of Vietnam dated 11 April 2017 ( “Decision 11”) on mechanisms to encourage the development of solar power projects in Vietnam. The Draft Decision is expected to be in full force from 1 July 2019 if approved by the Prime Minister of Vietnam, and introduces major changes in comparison with Decision 11.
CLASSIFICATION OF SOLAR POWER PROJECT
The Draft Decision differentiates between following four types of solar power projects:
- Floating solar power project – a grid-connected solar power project having solar panels, being installed on structures floating on a water surface, directly connected to the power grid of the power purchaser.
- Ground-mounted solar power project – a grid-connected solar power project having solar panels, being (a) installed on the ground, directly connected to the power grid of the power purchaser, or (b) installed on a rooftop, with capacity of more than 1 MWp, directly connected to the power grid of the power purchaser.
- Solar power project with an integrated storage system – a grid-connected solar power project using an electrochemical storage system for the purpose of electrical power storage directly connected to the power grid of the power purchaser. The minimum requirement for storage capacity is 25% of alternating current capacity in two hours.
- Rooftop solar power project – a solar power project which has solar panels, being installed on a rooftop or attached to a building with the capacity of less than or equal to 1 MWp.
NEW SOLAR POWER FEED-IN-TARIFF FROM 1 JULY 2019 UNTIL 2021
The Draft Decision specifies a different Feed-in-Tariff (the “FiT”) depending upon (a) the type of project and (b) in which of four irradiation regions the project is located. The higher FiTs are applicable to regions with lower irradiation levels. In contrast, Decision 11 only applied one FiT. The proposed new FiTs are applicable for 20 years for that part of, or the whole of, solar power projects connected to the grid which have a commercial operation date in 2021 (the specific date has not been specified yet in the Draft Decision).
The irradiation regions are as follows:
- Region 1 (28 provinces): Ha Giang, Bac Kan, Cao Bang, Tuyen Quang, Thai Nguyen, Lao Cai, Yen Bai, Lang Son, Quang Ninh, Phu Tho, Vinh Phuc, Bac Giang, Hai Duong, Hoa Binh, Ha Noi, Ha Nam, Bac Ninh, Hung Yen, Hai Phong, Ninh Binh, Thai Binh, Ha Tinh, Nam Dinh, Quang Binh, Thanh Hoa, Lai Chau, Nghe An, Son La.
- Region 2 (6 provinces): Quang Tri, Dien Bien, Thua Thien Hue, Quang Nam, Da Nang, Quang Ngai.
- Region 3 (23 provinces): Kon Tum, Ca Mau, Hau Giang, Binh Dinh, Bac Lieu, Kien Giang, Soc Trang, Can Tho, Vinh long, Tra Vinh, Lam Dong, Ben Tre, Tien Giang, An Giang, Dak Nong, Ho Chi Minh City, Dong Nai, Dong Thap, Ba Ria – Vung Tau, Long An, Binh Duong, Binh Phuoc, Tay Ninh.
- Region 4 (6 provinces): Phu Yen, Gia Lai, Dak Lak, Khanh Hoa, Ninh Thuan, Binh Thuan.
The FiT for each of these regions is as follows:
The Draft Decision is currently being publicized on the MOIT’s website and comments will be received until 15 April 2019. The Draft Decision may be amended to reflect appropriate comments.
The information provided in this article is for information purposes only and is not intended to constitute legal advice should be obtained from qualified legal counsel for all specific situations.
DFDL Contacts
Hoang Phong Anh
Partner, DFDL Vietnam
phonganh.hoang@dfdl.com
Angus Mitchell
Partner & Head of the Regional Energy Mining and Infrastructure Practice Group, DFDL Vietnam
angus.mitchell@dfdl.com
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Joint Retail Breakfast Talk by DFDL and CBRE Cambodia | 01 March 2019 | Phnom Penh
Where is retail heading?
DFDL & CBRE Cambodia are pleased to invite you to their Retail Breakfast Talk.
There has been no slow down in Phnom Penh retail supply since last year. With many upcoming retail projects announcements, it is important to understand what are the key success factors that help
each project to stand out from the others.
At this Retail Breakfast Talk, you will hear about retail market overview, where the market is heading toward, and what developers and tenants need to understand in terms of legal and design aspect.
Our senior panel speakers from CBRE Cambodia, DFDL, Archetype, and Kantar TNS Cambodia will explore the following:
- Richard Leech, Executive Director: Retail market update, opportunity, challenges and sound advices for developers, landlord and retailers.
- Marine Ros, Architectural Design Director, Archetype: New trend in commercial center, and what is ideal for Cambodia.
- Guillaume Massin, Partner & Managing Director, DFDL Cambodia: Legal, tax and business advice on land and licensing issues, to both tenants and developers.
- Lengchansocheat Chhat, Managing Director, Kantar TNS Cambodia: Cambodian consumer behavior and digital trends that helps answer how developers, landlord and retailers stay relevant and up‐to‐date.
This is a must-attend event for anyone who currently has an investment or is contemplating in investing in retail projects in Cambodia. As places are limited, be sure to register as soon as possible.
Agenda:
- 07:30 – 08:00am: Registration & Breakfast Networking
- 08:00 – 08:30am: CBRE Cambodia Retail Market Update
- 08:30 – 09:00am: Archetype Commercial Center Trend
- 09:00 – 09:30am: DFDL Cambodia Legal & Tax Overview
- 09:30 – 09:45 am: Coffee Break & Networking
- 09:45 – 10:00 am: TNS Cambodia Consumer Behavior and Digital Trends
- 10:00 – 10:30am: Q&A – Panel Discussion
Date: Friday, 01 March 2019
Time: 7:30am – 10:30am
Venue: Raffles Hotel Le Royal
Fees: $25
To register, please contact: events.cambodia@dfdl.com
If you have any questions or require further information, please do not hesitate to contact us: events.cambodia@dfdl.com
*For any cancellation, please inform us by way of e-mail before 2pm on 28 February 2019.
The post Joint Retail Breakfast Talk by DFDL and CBRE Cambodia | 01 March 2019 | Phnom Penh appeared first on DFDL.
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Transfer Pricing Seminar: A Strategic Sharing Session | 05 March 2019 | Phnom Penh
DFDL Cambodia Hosts a Strategic Sharing Session on Transfer Pricing
On 5 March 2019, DFDL hosted a Transfer Pricing Seminar: “A Strategic Sharing Session” in Phnom Penh, Cambodia. The morning event focused on recent transfer pricing developments, including market interest rates, the new documentation requirements, and audits.
Our expert speakers provided critical guidance and clarification for taxpayers on their duties and obligations under the transfer pricing regulations.
We were honored to have as our special speaker at this event Mr. Traing Lay – Chief of the APA and Transfer Pricing Bureau from the General Department of Taxation, Cambodia.
DFDL Partner & Head of Regional Accounting Advisory Practice Group, Sokheng Say welcomed all participants to the event and opened the proceedings.
Steven Carey & Eu-Kim Chan, Regional Transfer Pricing experts, discussed best practice risk and compliance strategies for transfer pricing in Cambodia, introduced the key concepts, explained why it is so important, methods of implementation, and outlined a risk and action plan.
This was followed by Mr. Traing Lay who provided an overview of the current Cambodian Transfer Pricing regime, presenting the general provisions, core principles, and the primary methods of allocating income and expenses among related parties.
The session was well received by the over 90 participants in attendance and concluded with an engaging Q&A session where participants asked questions of and held illuminating exchanges with senior tax officials on the key transfer pricing issues of concern.
DFDL is excited to extend an invitation to what we believe will be a very informative session on the Cambodian transfer pricing requirements that were introduced in October 2017. The seminar will have an emphasis on recent transfer pricing developments, including market interest rates, documentation requirements and audits.
We are honored to have as our special speaker at this event Mr. Traing Lay – Chief of the APA and Transfer Pricing Bureau of the General Department of Taxation, Cambodia.
Mr. Traing Lay will be joined by Regional Transfer Pricing Expert Mr. Steven Carey and DFDL Head of Cambodia Tax Practice, Mr. Clint O’Connell.
The purpose of this seminar is to provide guidance and clarification for taxpayers in Cambodia regarding their obligations under the transfer pricing regulations. By bringing together senior officials from the General Department of Taxation and both Cambodian and regional tax experts, this is a truly unique opportunity to hear from both the tax department and the private sector regarding the application and implementation of this important area of tax.
A panel discussion and Q&A session will follow the presentations where you will have the opportunity to ask questions and engage with senior tax officials and leading tax advisers on the important transfer pricing concerns highlighted at this event.
As places are limited, be sure to register as soon as possible.
Topics to be covered:
- Transfer pricing overview
- Recent updates on transfer pricing in Cambodia
- Accepted transfer pricing approaches for common and high risk transactions:
- Services fees (e.g. management services, development services, marketing services)
- Royalties for intangibles (e.g. trademark fees or know how)
- Intercompany loans
- Property leases
- Implementation tips (e.g. calculating cost bases, preparing legal agreements)
- Transfer pricing in the region – lessons from Vietnam, China, Indonesia
- Timeframe for setting up transfer pricing policy, preparing documentation and completing the annual TP declaration form
Date: Tuesday, 5 March 2019
Time: 8:00 am – 11:30 am
Venue: Rosewood Hotel, Salon I
Fees: USD45
If you have any questions or require further information, please do not hesitate to contact us: events.cambodia@dfdl.com.
*For any cancellation, please inform us by way of e-mail before 2pm on 28 February 2019.
Speakers:
Mr. Traing Lay
Chief of APA and Transfer Pricing Bureau Department Department of Enterprise Audit, General Department of Taxation
Mr. Steven Carey
Managing Director, Duff & Phelps
Mr. Clint O’Connell
Partner & Head of Tax Practice Group, DFDL Cambodia
The post Transfer Pricing Seminar: A Strategic Sharing Session | 05 March 2019 | Phnom Penh appeared first on DFDL.
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DFDL Tax Team Article on Transfer Pricing Published by Bloomberg
On 7 January 2019, Bloomberg published an article that was co-authored by Jack Sheehan (Partner; Regional Head of the Tax Practice Group), Jonathan Blaine (Tax Director) and Patipan Kongviriyagit (Senior Tax Manager) on Seven Aspects of Transfer Pricing in Thailand.
The article focuses on Thailand’s new transfer pricing law that entered into effect on 1 January 2019 and adopts internationally recognized standards for transfer pricing and provides a clearer application of transfer pricing rules for both Thai inbound and outbound investment. As Thailand seeks to continue and solidify its transformation into an advanced economy and regional investment hub, this new law forms part of a wider effort that Thailand is implementing to overhaul its legislation. This law now provides for stringent transfer pricing documentation requirements, sets firmer penalties for non-compliant companies, and brings Thailand more firmly into line with international tax regulations and norms.
Click here to read the full article.
DFDL Contacts
Partner and Head of Regional Tax Practice
Tax Director, DFDL Thailand
Senior Tax Manager, DFDL Thailand
The post DFDL Tax Team Article on Transfer Pricing Published by Bloomberg appeared first on DFDL.
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DFDL Celebrates International Women’s Day
Celebrating Women and Their Continued Path To Greater Success
In celebration of International Women’s Day 2019, we take this time to recognize the achievements of the women at our Firm and around the world.
Happy International Women’s Day!
The post DFDL Celebrates International Women’s Day appeared first on DFDL.
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Thai Fintech Association – Startup Funding Essentials | 9 March | Bangkok
DFDL Thailand is pleased to invite you an event hosted by the Thai Fintech Association: Startup Funding Essentials on 9 March 2019 at the Knowledge Exchange in Bangkok.
This event aims to encourage and support the development of a startup ecosystem and share knowledge and insights on how to fund and incubate startup enterprises.
Nipaporn Supha-Utchaichan (Partner) and Walanchathas Sanguanwong (Regional Senior Legal Adviser) will take the participants through the crucial legal aspects and commercial factors that must be considered by startup businesses, focusing in particular on the Term Sheet and Shareholders’ Agreement.
Date: Saturday, 9 March 2019
Time: 10am – 5pm
DFDL’s session: 3.15pm – 5pm
Venue: Knowledge Exchange (KX), 13th Floor,
110/11 Krung Thonburi Road, Banglampulung,
Bangkok, Thailand 10600
Fee: THB 3,000 for members of the Thai Fintech Association
THB 4,700 for non-members
THB 4,000 early bird rate for non-members who register before 14 Feb 2019
Agenda:
- 9.30am – 10am: Registration
- 10am – 12pm: Pitching for fundraising
- 12pm – 1pm: Lunch
- 1pm – 3pm: Fundraising for Startup & Valuation
- 3pm – 3.15pm: Coffee break
- 3.15pm – 5pm: Term Sheet and Shareholders’ Agreement
- 5pm: Closing
Registration: https://www.eventpop.me/e/5001-startup-funding-essential-tfta
The post Thai Fintech Association – Startup Funding Essentials | 9 March | Bangkok appeared first on DFDL.
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Indonesia Legal Alert: A Regulatory Pole Vault for the Indonesian Crypto-Industry
February 2019 was a tumultuous month for the Indonesian crypto-industry with the introduction of regulations that impose staggering thresholds for minimum capital and closing balance requirements among other stringent qualifying criteria for Crypto Asset Exchanges, Custodians, Clearing Agencies and Traders.
The regulatory rationale advanced by Indonesia’s Commodity Futures Trading Supervisory Authority, “Bappebti” is that in view of anticipated transaction volumes, robust financials are the need of the hour to promote market confidence and accountability.
Having permitted futures trading of crypto assets in late 2018[1], Bappebti issued a significant regulatory framework for the crypto asset futures market[2] on the 8th of February, 2019, close on the heels of another regulation which revised the regulatory landscape applicable to general commodity futures trading[3].
The new regulations impose potentially crippling costs and set a high bar for regulatory compliance on a fledgling industry. Additionaly, the new regulations also set out a quite comprehensive trading mechanism of the crypto asset trading which shall be followed by all of the relevant parties in crypto asset trading. Should you have any queries or concerns, please do not hesitate to contact our resident digital asset experts.
[1] Peraturan Menteri Perdagangan No. 99 Tahun 2018 Tentang Kebijakan Umum Penyelenggaraan Perdagangan Berjangka Aset Kripto.
[2] Peraturan Badan Pengawas Perdagangan Berjangka Komoditi No. 5 Tahun 2019 Tentang Ketentuan Teknis Penyelenggaraan Pasar Fisik Aset Kripto di Bursa Berjangka.
[3] Peraturan Badan Pengawas Perdagangan Berjangka Komoditi No. 2 Tahun 2019 Tentang Penyelenggaraan Pasar Fisik Komoditi di Bursa Berjangka.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
DFDL Contacts
Partner, Head of DFDL India Desk, Head of the Regional Banking and Finance Practice Group & Head of the Indonesia Practice Group
Legal Adviser
The post Indonesia Legal Alert: A Regulatory Pole Vault for the Indonesian Crypto-Industry appeared first on DFDL.
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DFDL Myanmar Recently Quoted in Frontier Myanmar Article on the Banking Sector
The DFDL Myanmar team featuring William Greenlee (Partner; Managing Director), Nishant Choudhary (Deputy Managing Director; Head of Banking & Finance Practice) and Rohan Bishayee (Legal Adviser) have been quoted in the Frontier Myanmar Newspaper on the recent opening up of the banking sector in Myanmar.
The Central Bank of Myanmar recently announced that foreign banks and financial institutions would be allowed to have up to 35% equity investment participation in local private banks. Local banks with such a foreign equity injection up to this threshold would now be allowed to operate freely in Myanmar.
Drawing from DFDL’s article: “CBM Allows 35% Foreign Equity Investment in Local Private Banks”, Frontier Myanmar quotes DFDL’s view that “Foreign shareholdings in local banks would also boost the efficiency and quality of services provided by these local banks and thus make the banking sector in Myanmar a lot more progressive and akin to international standards.”
This decision on equity participation is a significant development in the country’s banking sector allowing local banks to greatly expand their services and operations. It will also boost the efficiency and quality of services provided by local banks, enhancing progress throughout the Myanmar banking sector and bringing them more firmly into line with international financial standards.
Read the Frontier Myanmar article “Uncertainty Clouds Bank Equity Move” – https://frontiermyanmar.net/en/uncertainty-clouds-bank-equity-move
Read DFDL article “CBM Allows 35% Foreign Equity Investment in Local Private Banks” – https://www.dfdl.com/resources/legal-and-tax-updates/myanmar-legal-update-cbm-allows-35-foreign-equity-investment-in-local-private-banks/
DFDL Contacts
Partner, Managing Director
DFDL Myanmar
Deputy Managing Director,
Head of Banking & Finance Practice
DFDL Myanmar
The post DFDL Myanmar Recently Quoted in Frontier Myanmar Article on the Banking Sector appeared first on DFDL.
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Nishant Choudhary Speaks at IPBA 2nd Mekong Regional Forum
On 9 March 2019, DFDL Myanmar Deputy Managing Director and Head of Banking & Finance Practice, Nishant Choudhary spoke with four experts on a panel focusing on Reforms in Companies and Commercial Law in the region at IPBA 2nd Mekong Regional Forum, held at Yangon- Pan Pacific Hotel. IPBA is one of the leading association of lawyers globally. It is the first forum of IPBA ever held in Myanmar and is a precursor to the annual conference of IPBA to be held in Singapore in April this year.
Nishant spoke about the recent legal reforms in Myanmar, that are enabling the investments. He, along with others, focused on practical solutions for greenfield, M&A and related tax positions. The forum featured lively discussions on investment laws, reforms in company law and commercial law, and arbitration in the Mekong Region.
DFDL Contact
Deputy Managing Director,
Head of Banking & Finance Practice
DFDL Myanmar
The post Nishant Choudhary Speaks at IPBA 2nd Mekong Regional Forum appeared first on DFDL.
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Vietnam Legal Update: Proposed New Solar Feed-In-Tariff
On 22 February 2019, the Ministry of Industry and Trade of Vietnam (the “MOIT”) publicized a draft Decision (the “Draft Decision”) that will replace Decision No. 11/2017/QD-TTg issued by the Prime Minister of Vietnam dated 11 April 2017 ( “Decision 11”) on mechanisms to encourage the development of solar power projects in Vietnam. The Draft Decision is expected to be in full force from 1 July 2019, if approved by the Prime Minister of Vietnam, and introduces major changes in comparison with Decision 11. This Draft Decision modifies the previous draft issued on 29 January 2019.
CLASSIFICATION OF SOLAR POWER PROJECT
The Draft Decision differentiates between following four types of solar power projects:
- Floating solar power project – a grid-connected solar power project with solar panels installed on structures floating on a water surface, directly connected to the power grid of the Electricity Vietnam (“EVN”).
- Ground-mounted solar power project – a grid-connected solar power project having solar panels, being (a) installed on the ground, directly connected to EVN’s power grid, or (b) installed on a rooftop, with capacity of more than 1 MWp, directly connected to EVN’s power grid.
- Solar power project with an integrated storage system – a grid-connected solar power project that uses an electrochemical power storage system and that is directly connected to EVN’s power grid. The stipulated minimum efficiency of the storage system is 25% of alternating current capacity in two hours.
- Rooftop solar power project – a solar power project which has solar panels installed on a rooftop or attached to a building with the capacity of less than or equal to 1 MWp.
ROOFTOP SOLAR POWER MODELS
The Draft Decision provides for four rooftop solar power interconnection and metering models as follows:
- Power consumption household model is a rooftop solar power project with a connection point between the metering system and the consumption system. EVN must pay for any of the power generated from the rooftop project that is delivered to EVN’s power grid instead of being consumed. The price payable by EVN is the applicable Feed-in-Tariff (the “FiT”) stated in the table below.
- Business family household selling electricity model is a rooftop solar power project with a connection point between the metering system and the power grid of the power purchaser. EVN must pay for the amount of power from the rooftop project delivered to EVN’s power grid at the applicable FiT.
- Direct power sale and purchase is a model whereby investors produce and sell power from the rooftop solar power project to other entities, and where the project does not connect to or otherwise consume power from the national power system. Producers and consumers shall freely reach an agreement on the tariff purchase price. The substance of the contract must be in accordance with current regulations on civil and commercial activities. Any residual power delivered to the power grid shall be sold to EVN, at the applicable FiT.
- Intermediary power sale and purchase is a model of sale and purchase where producers sell power from the rooftop solar power project by first connecting to the power grid of any private (i.e. not EVN) power distribution and retail entities. The consumers off-take from the national grid and any surplus is sold at the relevant FiT (table below) to EVN. Any private power distribution and retail entities participating in this model have the responsibility to coordinate with EVN to record the amount of power sold from the solar power project onto the power grid through a metering system. EVN shall directly pay the power producer.
NEW SOLAR POWER FEED-IN-TARIFF FROM 1 JULY 2019 UNTIL 2021
The Draft Decision specifies a different FiT depending upon (a) the type of project and (b) in which of four irradiation regions the project is located. The higher FiTs are applicable to regions with lower irradiation levels. In contrast, Decision 11 only applied one FiT. The proposed new FiTs are applicable for 20 years for that part of, or the whole of, solar power projects connected to the grid which have a commercial operation date in 2021 (the exact date in 2021 is not stated in the Draft Decision).
The irradiation regions are as follows:
- Region 1 (28 provinces): Ha Giang, Bac Kan, Cao Bang, Tuyen Quang, Thai Nguyen, Lao Cai, Yen Bai, Lang Son, Quang Ninh, Phu Tho, Vinh Phuc, Bac Giang, Hai Duong, Hoa Binh, Ha Noi, Ha Nam, Bac Ninh, Hung Yen, Hai Phong, Ninh Binh, Thai Binh, Ha Tinh, Nam Dinh, Quang Binh, Thanh Hoa, Lai Chau, Nghe An, Son La.
- Region 2 (6 provinces): Quang Tri, Dien Bien, Thua Thien Hue, Quang Nam, Da Nang, Quang Ngai.
- Region 3 (23 provinces): Kon Tum, Ca Mau, Hau Giang, Binh Dinh, Bac Lieu, Kien Giang, Soc Trang, Can Tho, Vinh long, Tra Vinh, Lam Dong, Ben Tre, Tien Giang, An Giang, Dak Nong, Ho Chi Minh City, Dong Nai, Dong Thap, Ba Ria – Vung Tau, Long An, Binh Duong, Binh Phuoc, Tay Ninh.
- Region 4 (6 provinces): Phu Yen, Gia Lai, Dak Lak, Khanh Hoa, Ninh Thuan, Binh Thuan.
The FiT for each of these regions is as follows:
| Type of solar power project | Region 1 FiT | Region 2 FiT | Region 3 FiT | Region 4 FiT | ||||
| VND/kWh | US cent/kWh equivalent | VND/kWh | US cent/ kWh equivalent | VND/kWh | US cent/ kWh equivalent | VND/kWh | US cent/ kWh equivalent | |
| Floating solar power project | 2,159 | 9.44 | 1,857 | 8.13 | 1,664 | 7.28 | 1,566 | 6.85 |
| Ground-mounted solar power project, or rooftop project over 1MWp | 2,102 | 9.20 | 1,809 | 7.91 | 1,620 | 7.09 | 1,525 | 6.67 |
| Solar power project with an integrated storage system | – | – | – | – | 1,994 | 8.72 | 1,877 | 8.21 |
| Rooftop solar power project up to 1MWp | 2,486 | 10.87 | 2,139 | 9.36 | 1,916 | 8.38 | 1,803 | 7.89 |
The Draft Decision is currently being publicized on the MOIT’s website and comments will be received until 15 April 2019.
The information provided in this article is for information purposes only and is not intended to constitute legal advice should be obtained from qualified legal counsel for all specific situations.
DFDL Contacts
Hoang Phong Anh
Partner, DFDL Vietnam
phonganh.hoang@dfdl.com
Angus Mitchell
Partner & Head of the Regional Energy Mining and Infrastructure Practice Group, DFDL Vietnam
angus.mitchell@dfdl.com
The post Vietnam Legal Update: Proposed New Solar Feed-In-Tariff appeared first on DFDL.
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Asia Tax Awards 2019: DFDL Shortlisted in Multiple Categories
DFDL is proud to announce that our Tax Practice has been shortlisted in several categories for the Asia Tax Awards 2019:
- Cambodia Tax Firm of the Year;
- Cambodia Tax Disputes & Litigation of the Year;
- Thailand Tax Firm of the Year;
- Vietnam Tax Firm of the Year;
- Vietnam Transfer Pricing Firm of the Year;
- DFDL Partner and Head of the Regional Tax practice, Jack Sheehan, has been nominated as Asia Tax Practice Leader of the Year.
We thank everyone on the DFDL tax team for their dedication and hard work which have led to DFDL being selected for this prestigious awards ceremony. This year’s ITR Asia Tax Awards show will take place at the Marina Mandarin on 9 May 2019.
Find out more here: https://www.tpweek.com/articles/asia-tax-awards-2019-shortlist-announced/aruwkgyg
DFDL Contact
DFDL Marketing Communications Team
communications@dfdl.com
Read more about DFDL
Read more News
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Vietnam Legal Alert: New Regulations Further Restrict the Scope of Local Lending in Foreign Currency
The State Bank of Vietnam (the “SBV”) issued Circular No. 42/2018/TT-NHNN dated 28 December 2018 (“Circular 42”) that amends and supplements specific articles of Circular No. 24/2015/TT-NHNN of the SBV dated 8 December 2015 (“Circular 24”) regulating lending in foreign currencies to resident borrowers by credit institutions and foreign bank branches established and operating in Vietnam (the “Lenders”). Circular 42 took effect from 1 January 2019.
1. The conditions and deadlines for lending in foreign currencies for offshore payments of imported goods and services
| Circular 24 | Circular 42 |
| The Lenders may provide short-term, mid-term and long-term loans in foreign currencies for the purpose of offshore payment for the import of goods and services if the borrowers have sufficient foreign currencies from production and business income to repay such loans. |
(i) Lenders may provide foreign currency loans for the purpose of offshore payment for the import of goods and services in the following cases:
(i) Short-term loans: until 31 March 2019; and (ii) Mid-term and long-term loans: until 30 September 2019.
(ii) Lenders may provide short-term loans to meet domestic capital needs to implement plans to produce and/or trade goods exported through Vietnam’s border checkpoints. When loans are disbursed, borrowers must sell such amounts of foreign currency to the Lenders in spot foreign exchange transactions, except for cases where loans are used to make payment in foreign currencies as stipulated by the laws. The borrowers must have sufficient foreign currency revenue from exports to repay the loans. |
2. Repayment currencies
A borrower may buy foreign currencies from other credit institutions and foreign bank branches to repay the loan to the Lender if:
(i) due to objective reasons, the borrower does not have enough volume of foreign currency when repayment is due; or
(ii) prior to execution of the credit or loan agreement, the Lender assesses that the borrower does not have sufficient income in foreign currencies. In this case, the credit institutions and foreign bank branches selling foreign currencies to the borrower must transfer such foreign currencies to the Lender.
3. Transitional period
Loan agreements executed before 1 January 2019 will not be subject to Circular 42, the Lender and the borrower can continue to follow the agreed terms and conditions in accordance with the provisions of law at the time of signing. Amendments and supplements to credit agreements must comply with provisions of Circular 42 however.
The information provided in this article is for information purposes only and is not intended to constitute legal advice should be obtained from qualified legal counsel for all specific situations.
DFDL Contacts
Partner, DFDL Vietnam
Junior Legal Adviser
The post Vietnam Legal Alert: New Regulations Further Restrict the Scope of Local Lending in Foreign Currency appeared first on DFDL.
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Ranked in Chambers and Partners 2019 Leading Firm Awards
The post Ranked in Chambers and Partners 2019 Leading Firm Awards appeared first on DFDL.
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Cambodia Tax Alert: Interest Rate Update/Transfer Pricing
Market rates
On 13 March 2019, the General Department of Taxation (“GDT”) released Notification 4630, which provides the “market rates” for determining the caps on interest rate deductions for loans that had been entered into using Khmer Riel (“KHR”) and United States Dollars (“USD”) in the 2018 financial year.
The “market rates” for 2018 are as follows:
- For borrowing in USD – 8.35%
- For borrowing in KHR – 9.44%
These rates were gathered by the GDT through the averaging of the interest rates of eleven (11) of the largest Cambodian banks for the USD market rate and eight (8) of the largest Cambodian banks for the KHR market rate. The banks were not identified in the Notification.
We note that the literal translation of the Khmer language mentions that the above rate will apply to “money borrowed in 2018”. There is some ambiguity in the use of this Khmer term as it is not certain whether the rate cap will apply only to:
(i) Interest on loan agreements that were executed in 2018; or
(ii) Interest on loan agreements executed before 2018 but with drawdowns that occurred in 2018 (such as facility agreements).
It would appear from the straightforward application of Notification 2126 that the 2018 drawdowns on facility agreements executed before 2018 should still be considered as “money borrowed in 2017.”
The interest rate deduction cap for Cambodian tax registered borrowers paying interest is based on the following:
- Taxpayers who borrowed money from non-related persons may deduct interest expenses up to 120% of the deemed market rate applicable at the time of the borrowing. (emphasis added)
- Taxpayers who borrowed money from related persons may deduct interest expenses up to 100% of the deemed market rate applicable at the time of the borrowing. (emphasis added)
These interest deduction caps are applied for each loan, and are in addition to the annual deduction limit under Article 12 of the Law on Taxation and Section 5.9 of Prakas on Tax on Income, which caps the annual interest deduction to the sum of 50% of the taxpayer’s non-interest income and 100% of its interest income for the applicable tax year.
In order to confirm that the “market rates” are in line with the taxpayer’s risk profile (credit rating), or to support the application of a rate below the “market rates” it is suggested that an independent economic benchmarking study be prepared and included in the taxpayer’s transfer pricing documentation in accordance with Prakas 986.
Interest free or low-interest loans
Since the introduction of transfer pricing regulations in2017 there has been uncertainty around the validity of interest free or low-interest loans between related parties. Instruction 11946 dated 21 August 2018 provide that taxpayers are required to ensure that any interest charged on a related party loan is arm’s length.
In recent discussions with the GDT they have confirmed that the loan between related parties should adhere to the transfer pricing regulations. The GDT has further clarified that interest-free loans or low interest rate loans between related parties may still be acceptable in some cases provided they are supported with proper documentation.
Any tax reassessment with respect to an interest adjustment will be reviewed by the specialized transfer pricing unit of the GDT. Additionally, the GDT has stated that they will no longer use a “deeming” method/approach on related party transactions. Any “adjustment” made by the GDT on related party transactions will be based on valid evidence.
The key take away from this is that it seems that interest free or low-interest loans are still possible between related parties in certain limited circumstances e.g. acquiring an asset, but taxpayers should ensure that they have strong supporting documentation in place.
The DFDL tax team is always ready to answer any questions you may have on this and other tax issues.
Tax services required to be undertaken by a licensed tax agent in Cambodia are provided by Mekong Tax Services Co., Ltd, a member of DFDL and licensed as a Cambodian tax agent under license number – TA201701018.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
DFDL Contact
Clint O’Connell
Partner
Head of Cambodia Tax Practice
clint.oconnell@dfdl.com
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Jonathan Blaine Appointed an Affiliated Member of the Society of Trust and Estate Practitioners
DFDL wishes to congratulate Jonathan Blaine (Tax Director; Regional Head of Compliance & Investigations Practice) on being appointed an Affiliated Member of the Society of Trust and Estate Practitioners (STEP). STEP is the global professional association for practitioners specializing in family inheritance matters and succession planning. STEP runs training and development initiatives around the world and is involved with public policy advocacy efforts to safeguard the rights of heirs, build capacity, and strengthen knowledge and competencies in the realm of inheritance issues.
Thailand Tax Director & Head of Regional Compliance & Investigations
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DFDL Assisted Norfund on USD 10 Million Transaction
DFDL Lao assisted as local counsel to the lender (Norfund ) in relation to a loan of USD 10 million to Acleda Bank Lao Limited with the aim of supporting the SME sector in the Lao PDR. The team was involved in the review of facility agreement and conducting due diligence on the borrower. The transaction was part of the ongoing commitment by Norfund for additional local currency loan which the Acleda Bank shall use to on-lend to its customers. The said loan will assist Acleda Bank in meeting increasing demand, especially in the growing micro and SME segments in the Lao PDR.
The team was led by DFDL’s Vinay Ahuja (Partner; Head of Banking, Finance & Technology Practice Group), and assisted by Briana Olson (Regional Legal Adviser) and Bounyasit Daopasith (Legal Adviser).
DFDL Contacts
Partner; Head of Indonesia Practice; Head of Banking, Finance & Technology Practice Group
Regional Legal Adviser
Legal Adviser
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Philippines Legal Alert: Philippines Overhauls Corporation Law to Aid Business
Contributed by Ocampo & Suralvo Law Offices
Aiming to provide a more business-friendly environment and boost the competitiveness of the economy, the Philippines recently enacted Republic Act No. 11232 or the Revised Corporation Code, which replaces the old code.
Under the old law, a corporation’s maximum term of existence was 50 years. Even though this period was extendible, many corporations failed to extend the term for various reasons, including simple neglect, missing nominee directors, or squabbling shareholders, among others. This resulted in some businesses prematurely closing down even though they were still productive.
The new law seeks to cure this by providing that all existing and future corporations shall have perpetual existence, unless the stockholders choose a shorter term (Section 11).
Moreover, the old law required a minimum of five incorporators in order to form a corporation. It also required a minimum of five directors, each of whom was required to be a stockholder. The result was that investors assigned nominees or dummies to become shareholders and directors just to comply with the minimum, even though these nominees or dummies did not have anything to do with the business.
The new law removes the minimum requirements and allows any natural person, trust, or estate to form a “One Person Corporation” or OPC as long as the OPC will not engage in any excluded activity (Section 116). These excluded activities are banking, quasi-banking, pre-need, trust, insurance, public and publicly listed companies, non-chartered government-owned and controlled corporations, and exercise of profession (Section 117). The OPC can make decisions by himself/itself as the sole director.
The Revised Corporation Code also completely deletes the minimum required capital stock. Previously under the old law, new corporations were required to have at least 25% of their capital stock subscribed, of which 25% was required to be paid-up. The minimum paid-up capital was PhP5,000. Note however that the minimum paid-in capital imposed by laws other than the Revised Corporation Code for special sectors (such as, the Retail Trade Act, the Foreign Investment Act, the General Banking Law, the Financing Company Act) were not affected Republic Act No. 11232.
These changes are expected to allow investors more flexibility in structuring their businesses.
Other highlights of the Revised Corporation Code are as follows:
- In case of a vacancy in the board of directors, and such vacancy prevents the board from constituting a quorum to act on an emergency situation in order to prevent grave, substantial, and irreparable loss or damage to the corporation, the directors are allowed to temporarily fill the vacancy by unanimously selecting a director from among the existing officers (Section 28). The powers of the “emergency director” are limited to actions pertaining to the emergency situation, and his/her term shall end within a reasonable period after the emergency situation has passed. Previously under the old law, if a vacancy is created either through removal by stockholders or expiration of the term of a director, the board had to wait for a stockholders’ meeting to fill the vacancy.
- As part of efforts to improve ease of doing business, the Revised Corporation Code mandates the SEC to develop and implement an electronic filing and monitoring system.
- The Revised Corporation Code allows electronic transmittal of notices among stockholders and/or directors. It also mandates the SEC to develop an electronic filing and monitoring system (Section 180).
- Stockholders who cannot be physically present during meetings are now allowed to vote through remote communication or in absentia (Section 49). Likewise, directors or trustees may now participate and vote in meetings through remote communication such as videoconferencing or teleconferencing (Section 52).
In a public statement, the Philippine Securities and Exchange Commission (SEC) said the revised law affords more protection to corporations and stockholders and promotes good corporate governance.
“Collectively, the amendments are aimed at encouraging entrepreneurship and the formation of new businesses, improving the ease of doing business in the country, promoting good corporate governance, increasing protection afforded to corporations and stockholders, and deterring corporate abuses and fraud,” read the SEC public statement, quoting Chairperson Emilio Aquino.
Contact
Atty. Jude Ocampo
Partner
Ocampo & Suralvo Law Offices
jocampo@ocamposuralvo.com
www.ocamposuralvo.com
The information provided here is for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
Read more about DFDL in Philippines
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Yanin Sirilak
Yanin is a Legal Adviser based at our Bangkok office. Yanin has experience working on matters related to corporate & commercial, mergers & acquisitions, banking & finance, EMI, and BOI. She graduated with an LL.M from the London School of Economics and Political Science and with an LL.B from Chulalongkorn University. She has also co-authored an article for Thomson Reuters Practical Law on Public Mergers and Acquisitions Global Guide: Thailand. Yanin is a licensed Attorney-at-Law and is fluent in Thai and English.
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Nicha Phonpichayasakul
Nicha Phonpichayasakul is a Junior Legal Adviser based at the Bangkok office. Nicha has experience working with both the government and private sectors, having assisted local, international, and SET listed companies. She has experience working on multi-jurisdictional projects, including matters related to technology, logistics, foreign direct investment, and the food & beverage sectors. Her key practice areas include corporate & commercial, mergers & acquisitions, capital markets, real estate, criminal law, intellectual property, environmental law, and tax. Nicha holds an LL.M from the Maurer School of Law, Indiana University along with an LL.B from Thammasat University. She speaks English, Thai, and Japanese.
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