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Vietnam’s Southern Key Economic Region – A Magnet for Investment

 Published: December 2020

Vietnam’s successful containment of the COVID-19 pandemic and the recently ratified Vietnam EU Free Trade Agreement (EVFTA) has reassured investors. Upbeat manufacturers have even relocated production to the country. In this context, it is important to understand Vietnam’s vast key economic regions tailored to specific industries – providing special incentives, cost structures, and clear regulatory frameworks. In this issue of Vietnam Briefing magazine, we look at the Southern Key Economic Region and the reasons why it is termed as an investment hub of the country.

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  • No. of Pages: 140 pages
  • ISBN: 978-988-14804-7-7

Southeast Asia has been hit hard by the COVID-19 pandemic as much of the rest of the world.

In response, countries across the ASEAN bloc have issued various stimulus packages containing incentives and new regulations to mitigate the economic impact of the pandemic.

Despite recording a downturn, ASEAN economies offer compelling investment prospects for prominent businesses and niche industries given the region’s well-established trade networks, growing middle-class cohort, and a young and educated workforce. In the first quarter of 2020, the bloc became China’s largest trading partner worth a total US$150 billion during this period. Furthermore, the IMF predicts the region to grow by 7.8 percent in 2021, fueled by the acceleration of China-based manufacturers looking to diversify their risks into ASEAN.

In this issue of the ASEAN Briefing magazine, we begin by introducing the different incentives and measures issued by ASEAN’s largest economies from March to June 2020 to mitigate the economic impact of the virus. We then analyze the HR and employment issues faced by businesses during the pandemic. Finally, we focus on the investment opportunities in ASEAN in the post COVID-19 era.

  1. Base Erosion Profit Shifting (“BEPS”) Project
    1. Introduction
    2. Impact of BEPS on China
    3. Revisions to China’s transfer pricing rules in a post-BEPS environment

  2. Advance Pricing Agreements (“APA”s)
    1. Introduction
    2. Categorization of APAs
    3. Administrative guidance on APAs
    4. Key APA Statistics
    5. In summary

  3. Intercompany Financing
    1. Introduction
    2. Alternative approach: the arm’s length debt test
    3. Recent developments on thin capitalization and intercompany financing
    4. Growth of China as a treasury hub

  4. Transfer Pricing Analysis of Intercompany Services
    1. Introduction
    2. Transfer pricing analysis of intra-group services
    3. China’s position on intercompany services
    4. SAT Announcement No. 16
    5. Concluding remarks

  5. Transfer Pricing Compliance
    1. Tax Return Compliance
    2. Transfer pricing documentation compliance
    3. Penalties and fines arising from transfer pricing non-compliance

  6. Understanding Taxation in China
    1. China’s tax system
    2. Tax collection and enforcement
    3. Need for Transfer Pricing in China
    4. Transfer pricing regulatory timeline

  7. What is Transfer Pricing?
    1. Transfer pricing at a glance
    2. Arm’s length principle
    3. Transactions entered into by multinational corporations
    4. The increasing prominence of transfer pricing

  8. Overview of Transfer Pricing Methods
    1. Comparability factors
    2. Transfer pricing methods
    3. Selection and application of transfer pricing method

  9. Preparing Transfer Pricing Documentation
    1. Introduction
    2. Group and Company Overview
    3. Industry analysis
    4. Functional analysis
    5. Transfer pricing design and policy
    6. Economic Analysis
    7. Chinese Transfer Pricing Documentation requirements
    8. Tips for preparing documentation

  10. Transfer Pricing for Intangibles
    1. What is an intangible asset?
    2. Intercompany royalties
    3. Contract R&D arrangements
    4. Cost sharing agreements
    5. Concluding remarks

  11. Transfer Pricing Audits and Enforcement in China
    1. Overview
    2. Audit target
    3. Transfer Pricing Audit Process
    4. Using the expert panel to resolve transfer pricing audits
    5. Penalties and interest
    6. Mutual Agreement Procedures
    7. Audit trends
    8. Tips for managing a transfer price audit

  12. Current Transfer Pricing Issues in China
    1. Comparability analysis
    2. Location Specific Advantages
    3. Intangibles
    4. Transfer pricing analysis of contract and toll manufacturers
    5. Sales, marketing and distribution activities
    6. Use of the Profit Split method

  13. Conclusion
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