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Lorenz & PartnersLegal, Tax and Business Consultants
About Lorenz & Partners - International firm of business lawyers headquartered in
Bangkok since 1995
- The firm is specialised in legal, tax and business consultation for foreign companies investing in Southeast Asia.
- We maintain offices in: Bangkok, Berlin, Hong Kong, Ho Chi Minh City and Taipei.
- Our services, e.g.:• International Commercial Law• Mergers & Acquisitions, Joint Ventures• International Tax Planning• Labour Law Issues• Management support
Lorenz & PartnersLegal, Tax and Business Consultants
Taxes are generally the main income source of a country and the main instrument for funding of its territorially defined state and other (supranational) tasks. Only few countries only raise a few or no taxes at all to their citizen (UAE etc.).
In return, the state is able to use this income, for example in order to provide infrastructure or to support the health or the social system.
So in the end, the (taxpaying) population benefits from the generated revenue.
Lorenz & PartnersLegal, Tax and Business Consultants
International tax law deals with the complexity of problems occuring in cross border cases, which are of particular importance regarding the taxation of natural persons, business partnerships and incorporate companies.
Without legal regulations improper double taxation would be found, and would restrain international trade and investments.
Lorenz & PartnersLegal, Tax and Business Consultants
On a bilateral basis, the prevention of double taxation is achieved by the conclusion of DTA.
A DTA is a contract under international law between two countries which regulates the extent a contracting party is entitled to its taxation jurisdiction.
The Organisation for Economic Co-operation and Development („OECD“) publishes and updates a model tax convention which serves as a template for bilateral negotiations regarding tax coordination and cooperation. This model is accompanied by a set of commentaries which reflect OECD-level interpretation of the content of the model convention provisions.
Most DTAs are modelled in accordance to the OECD Convention.
Lorenz & PartnersLegal, Tax and Business Consultants
• The Foreign Contractors Tax is deducted by the Vietnamese customer in case of supplying services or services associated with goods from a Foreign Contractor or Foreign Sub-Contractor being supplied in or outside Vietnam and which are consumed in Vietnam.
• The term Foreign Contractor means any foreign business organisation with or without a permanent establishment in Vietnam, and all foreign business individuals doing business in Vietnam.
• The Foreign Contractors Tax consists of two elements, namely the collection ofa value-added tax
element and a corporate tax
elementfor corporations or a personal income tax
element for individual.
Lorenz & PartnersLegal, Tax and Business Consultants
The Foreign Contractors Act also has effects on double taxation issues. Those shall be displayed using the example of DTA Germany-Vietnam:
The Foreign Contractors Tax is raised as a source tax, i.e. the tax obligation of the Foreign Contractor is to be deducted by the Vietnamese party from any payment made to a foreign contractor.
In accordance with the protocol to the DTA Vietnam, the Foreign Contractor Tax is deemed a profit tax. Corporate income Tax in Vietnam can now, under certain circumstances, be offset against German tax.
Lorenz & PartnersLegal, Tax and Business Consultants
Vietnam is a member of ASEAN since 1995 and took over the position of ASEAN Chairman for 2010.
ASEAN is aiming to create an ASEAN Economic Community (AEC) by 2015.
The foundation of the AEC is the ASEAN Free Trade Area(AFTA), a common external preferential tariff scheme to promote the free flow of goods within ASEAN.
Lorenz & PartnersLegal, Tax and Business Consultants
Increase ASEAN's competitive edge as a production base
in the world market through the
elimination, within ASEAN, of tariffs
and non-tariff barriers
Attract more direct foreign investments to
ASEAN
ASEAN has also concluded free trade agreements with other countries, such as the PR China, Korea, Japan, Australia, New Zealand and most recently India. ASEAN is currently negotiating a free trade agreement with the European Union. An FTA with the USA is not planned yet.
Lorenz & PartnersLegal, Tax and Business Consultants