EFFECTIVE USE OF PRIVATE FOUNDATION AND INTERNATIONAL BUSINESS COMPANIES FOR ASSET PROTECTION AND WEALTH MANAGEMENT 14 May 2019 Ho Chi Minh City
The Context of Wealth Management in Vietnam Speaker: Lim Chor Ghee CPA(Aust), CA(M’sia), MBA(HW,UK), MIntS(Syd), MIBP(UNISA), BComm(Melb) General Director, Tricor Vietnam HCMC, 14 May 2019 P4
• The surge of Vietnamese high net worth individuals and the rise of outbound investment from Vietnam • Classes of outbound investment / assets preferred by Vietnamese companies and individuals • Holding Vietnamese business through offshore entities and funds • Tax planning? Avoidance or evasion? • Legal and regulatory framework for outbound investment P5
2017 FDI: US$35b Registered US$17b disbursed Source: GSO P6
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https://seekingalpha.com/article/4188271-growth-emerging-asean P9
Classes of outbound investment / assets preferred by Vietnamese companies and individuals? P10
Tax: Resident vs Non-resident Having a registered place of permanent residence under the law on residence Habitual Having a house lease contract of 183 days or Residence more in Vietnam within a tax year and cannot Resident demonstrate tax residence of another country Number of Physically present in Vietnam for a period of 183 residing days days or more within one calendar year or for 12 consecutive months from arrival date Non-resident Individuals who do not meet either of the above criteria P11
Tax treatment – Employment Income RESIDENT NON- RESIDENT • PIT on Vietnam-sourced • PIT on worldwide income income • A number of allowable • Deductions are not permitted deductions • Progressive tax rate from 5% • Flat tax rate of 20% to 35% • PIT paid overseas may be • PIT exemption under DTA creditable (fully/partly) may be applied P12
P a Tax treatment - non employment income g e 1 3 Taxable income Tax rate Resident Non-resident Business (e.g. house rental) From 0.5% to 5% From 1% to 5% Dividend 5% 5% Capital/shares transfer 20% on gains OR 0.1% on sale proceeds 0.1% on sale proceeds Real property disposal 2% on sale proceeds 2% on sale proceeds Royalties/franchising 5% on amount exceeding VND10 million Winnings/Prizes 10% on amount exceeding VND10 million Inheritance/Gifts P13
Capital Gains Mitigation? Avoid change of IRC VN 14 P14
Is this do-able in Vietnam? https://www.ogier.com/publications/utilising-bvi-and-cayman-islands- entities-for-private-equity-investment-into-china P15
• The Vietnamese businesses invested in 16 countries and territories in the reviewed time, with Laos leading the list by accounting for 53.5 percent of total investment, followed by Cambodia, 17.3 percent, Cuba, 13.3 percent, and Australia 8 percent, reported the Foreign Investment Agency. • Vietnamese firms invested almost $21.4 billion into 1,188 projects across 70 countries and territories as of January 2017, FIA reported. P16
Outbound Investment from Vietnam • Company - requires outbound investment license. • By individuals? Upon obtaining residence status overseas • Tied to foreign exchange regulations • In reality? – Regulations lacks clarity / details. Opaque implementation / administrative procedures – Strict foreign exchange control and inconsistent laws – Concern over tax implications P17
Outbound Investment – Recent Updates • New Investment Law (late 2019 / 2020?) – an IRC for outbound investment by Vietnamese investors is no longer required ; it is proposed that outbound investment will be controlled through foreign exchange regulations on the transfer of capital overseas • Circular No.36/2018/TT-NHNN / 15 Feb 2019 – The lending rates should be agreed between lenders and customers (investors) but shall not exceed 70% of the customers' offshore investment capital P18
HCMC Tricor CBD: Level 1, IMM Group Building, 99 Nguyen Dinh Chieu Street, Ward 06, District 3, HCMC Tricor Center: No 16, Yen The Street, Ward 02, Tan Binh District, HCMC Hanoi Client Service Office: Room 909, 5S office, Level 9, Sky City Tower A, 88 Lang Ha Street, Lang Ha Ward, Dong Da District, Hanoi Key contacts Lim Chor Ghee General Director HP: +(84) 83 8686 288 Email: chorghee.lim@vn.tricorglobal.com Brian Nguyen Manager – Business Development HP: +(84) 93 321 32 73 Email: anhbinh.nguyen@vn.tricorglobal.com P19
INTRODUCTION TO LABUAN INTERNATIONAL BUSINESS AND FINANCIAL CENTRE: THE BENEFITS AND OPPORTUNITIES AS A MIDSHORE JURISDICTION Farah Jaafar-Crossby CEO, Labuan IBFC Inc.
Where is Labuan? Off the coast of Sabah, East Malaysia Federal Territory About 100,000 population Common time zone with major cities Where business meets leisure
What is Labuan IBFC? • International business and financial centre since 1990 • A tax-efficient substance enabling jurisdiction to facilitate businesses, trading, investments through financial services and legal structures • Well-balanced legal and regulatory framework Our Vision To be Asia Pacific’s leading midshore international business and financial centre Striking an ideal balance between client confidentiality and international best standards
Connecting Asia’s Economies 73% of Labuan Companies are Asian-based (as at 2018)
Internationally Recognised Labuan IBFC is firmly committed to adhering to OECD’s International Standards and Best Practices. In this regard, we continue to update our domestic legislative framework accordingly.
Comprehensive Legislation Labuan Financial Services and Securities Act 2010 Labuan Business Activity Tax Act 1990 Labuan Islamic Financial Services and Securities Act Labuan Financial Services Authority Act 1996 2010 Labuan Foundations Act 2010 Labuan Trusts Act 1996 Labuan Limited Partnerships and Limited Liability Labuan Companies Act 1990 Partnerships Act 2010
An Ecosystem of Solutions Services Structures • • Banking Holding company • Foundations • • Insurance – risk management Trading company • Captives • • Corporate secretarial and Leasing structures • Insurance and • Protected cell companies business administration Re-insurance • • Legal advisory Trust companies • Banking • • Administrative activities Company limited by shares and • Money broking • guarantee Trusteeship • Credit Token • • Limited partnership Accounting • Capital Market • • Audit Services Limited liability partnership • Financial • Trusts Exchange Available in conventional and Shariah-compliant forms Marketing offices may be located anywhere in Malaysia
Business Activities Companies Banking Insurance Leasing Trust Cos. (15,260) (55) (58) (216) (371) • Investment •Wholesale banking •Life/general •Aviation •Company holding incorporation •Investment banking •Broking •Shipping • Trading •Company •Loans/deposit •Captives •Heavy administration machinery •Financial guarantees •Re-insurance •Corporate secretarial •Trade finance •Trustee services Innovative Financial Wealth Management Commodity Trading Services (IFS) (162) (48) (40) •Oil and gas •Business succession •Money Broking •Estate management •Credit Token •Legacy planning •Payment System SOURCE: LABUAN IBFC’S MARKET REPORT 2018
Branded Names 28
Fiscal Regime • Investment 0% holding License entities are required to meet Trading substance creation, requirements and income • Trading Flexibility 3% Income operation expenditure, which can include license Election fee. • Irrevocable for Income Tax Act election 1967
Access to Wide Double Taxation Agreements Network ALBANIA ARGENTINA AUSTRALIA AUSTRIA BAHRAIN BANGLADESH BELGIUM BOSNIA BRUNEI CANADA CHILE CHINA HERZEGOVINA CROATIA CZECH DENMARK EGYPT FIJI FINLAND FRANCE GERMANY HONG KONG HUNGARY INDIA INDONESIA REPUBLIC IRAN IRELAND ITALY JAPAN JORDAN KAZAKHSTAN KOREA KUWAIT KYRGYZ LAOS LEBANON LUXEMBOURG NEW NORWAY PAKISTAN PAPUA NEW PHILIPPINES MALTA MAURITIUS MONGOLIA MOROCCO MYANMAR NAMIBIA NETHERLANDS ZEALAND GUINEA POLAND QATAR ROMANIA RUSSIA SAUDI SAN SEYCHELLES SINGAPORE SPAIN SRI LANKA SUDAN SOUTH ARABIA MARINO AFRICA SWEDEN SWITZERLAND SYRIA THAILAND TURKEY TURKMENISTAN UAE UK USA UZBEKISTAN VENEZUELA VIETNAM
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