Contractor Tax Obligations for Imported Vaccine Materials

NVC Joint Stock Company (NVC) operates under the Ministry of Agriculture and Rural Development, with its manufacturing facility located at the Vietnam - Singapore Industrial Park in Binh Duong province. The primary business activities include research, manufacturing, and trading in veterinary medicines, vaccines, and aquatic veterinary medicine. The company's products enjoy extensive consumption nationwide and have a presence in several countries, including Cambodia, Laos, Myanmar, Bangladesh, and China.

NVC's problems

Due to the specific nature of the industry, NVC has signed the Trademark license agreement with foreign vendors related to the imported biological materials for vaccine production.

In this Trademark license agreement, the Company incurs fees paid to foreign vendors such as: licensing fees, fees for applying for a transfer license, fees for importing/exporting materials, costs of transporting and handling of licensed materials; other related fees.

NVC's Board of Directors realized the complexity of the agreement. In addition, the company's accounting department does not have much experience in this new arising transaction to related fees paid to foreign vendors. This leads them to face many difficulties in accurately determining contractor tax obligations. Besides, determining contractor tax obligations is also related to other specialized laws such as technology transfer law and intellectual property law.

Therefore, the Company wants to get advice and solutions from TPM in order to correctly determine tax obligations, and avoid risks for businesses.

TPM's solutions

In response to the Company's request, TPM specialists conducted direct interviews with the Board of Directors and the accounting department to thoroughly understand the situation.

Simultaneously, TPM collected relevant documents, including the Trademark license agreement, commercial invoices, customs declarations, legal documents related to imported materials, licensing documents approved by the Ministry of Agriculture and Rural Development, and payment documents.

TPM's consulting team reviewed and compared legal bases such as Circular 103/2013/TT-BTC related to contractor tax, Circular 219/2013/TT-BTC on VAT policies, Law on Technology Transfer 07/2017/QH-14, Law on Intellectual Property, and current regulations.

In addition to obtaining opinions from leading experts, TPM conducted analytical procedures on actual business documents and provided consulting solutions related to technology transfer, tax declaration, and tax submission on behalf of foreign vendors for the technology transfer income they received

RESULTS

After receiving the 'Tax Consultation Letter' issued by TPM, NVC thoroughly analyzed the details of the services in the Trademark license agreement. This meticulous examination allowed for the accurate identification and declaration of contractor tax, mitigating the risks associated with incorrect determination of taxable value and potential administrative penalties related to contractor tax policy

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