PwC Vietnam NewsBrief Tax update 09 January 2013 Amended Law on Tax administration effective from 1 July 2013 The National Assembly has approved the Law No 21/2012/QH13 on Tax Administration which provides supplementation and amendments to the Law No 76/2006/QH11. The amended Law No 21/2012/QH13 will be effective from 1 July The key changes in the amended Law are as follows. Advanced Pricing Agreement (“APA”) This has been a much awaited scheme which provides the principle allowing tax payer and the tax authorities to agree in advance the manner of determination of arm’s length price, method of tax assessment in relation to related parties transactions. APA can be made between the Vietnamese tax authority with tax payers or tax authorities in other countries. Deferral of import duty payment on materials imported for manufacturing goods for export 275 days deferral of import duties payment in respect of materials imported for export manufacturing are only applied if the following conditions are met: Importers must perform import, export activities for at least two consecutive years (currently one year) up to the date of customs declaration without being subject to any tax penalties/ debt/ evasion; Importers must be export manufacturers in Vietnam; Importers must comply with laws on accounting and statistics; and Payments must be carried out via bank according to the regulations. Importers who do not satisfy the above conditions, but having a bank guarantee issued by a credit institution for securing the duty payment, are still entitled to the deferral of import duties payments based on the guarantee duration but not exceeding 275 days. Tax penalties The amended Law increases the level of penalty and interest, in particular: Interest on late payments increases from 0.05% to 0.07% per day for late payment exceeding 90 days; Penalties for tax under-declaration increases from 10% to 20%; Instead of applying 10% penalty for under-declaration of taxes or over-claim of tax exemption/ reduction/ refund relating to import and export, 20% penalty will now apply if being detected during customs inspection. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. In Ho Chi Minh City: contact Richard Irwin or Nguyen Thanh Trung (Tax), Masako Tsunoi (Japanese Business), Seong Ryong Cho (Korean Business), Bee Han Theng (Asian Chinese Business Services) at phone (84-8) , fax (84-8) In Ha Noi: contact Dinh Thi Quynh Van (Tax), Satoshi Inoue (Japanese Business) at phone (84-4) , fax (84-4)

PwC Vietnam NewsBrief Tax update 09 January 2013 The statue of limitation for tax violation The statue of limitation for tax violation still remains at 2 years for penalties on violation of tax procedures and 5 years for penalties for tax evasion and under payment. The amended Law further provides a limitation of 10 years for collection of outstanding tax, which is in line with the record keeping requirement for accounting purposes. No statue of limitation applies to tax payers that are not registered for tax payments. Changes in tax procedures Major changes in tax procedure include: In case of tax refund after inspection, the tax authorities are required to approve the tax refund or notify tax payers in writing reason for not refund within 40 days from the date of receiving proper documents from tax payers – reduced from current 60 days. In case of tax refund prior to inspection, the timeline for the tax authorities to approve the tax refund or notify tax payers reason for not refund is reduced from 15 to 6 working days. In case of tax refund prior to inspection, the amended Law requires a tax inspection for such refund to be done within one year from the date of the refund decision if: Enterprises declare losses for 2 consecutive years or having accumulative loss exceeding their chartered capital; or Enterprises claim tax refund from real estate activity, trading or services; or Enterprises change business location 2 times or more within 12 months prior to the date of tax refund decision; or Enterprises have unusual changes between tax assessable income and tax refunded amount within 12 months prior to the date of tax refund decision. Other cases are subject to tax inspection based on the risk management principle, whereby the tax inspection should be conducted within 10 years from the date of tax refund decision. ******* Please contact us if you have any concern or would like to discuss further. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. In Ho Chi Minh City: contact Richard Irwin or Nguyen Thanh Trung (Tax), Masako Tsunoi (Japanese Business), Seong Ryong Cho (Korean Business), Bee Han Theng (Asian Chinese Business Services) at phone (84-8) , fax (84-8) In Ha Noi: contact Dinh Thi Quynh Van (Tax), Satoshi Inoue (Japanese Business) at phone (84-4) , fax (84-4)