As the central city of Danang continues to be an attractive destination for foreign-invested enterprises, the city is expected to see more scrutiny on transfer pricing from local tax authorities and rising demand for related consultation services.
|Danang’s economic potential has exploded in recent years thanks to savvy investment. Photo: Hoang Thuy |
American-based Vector Fabrication Inc. has been investigating areas in central Vietnam for a $60-million microelectromechanical systems facility, and Danang has emerged as an ideal manufacturing base thanks to the city’s favourable investment climate and fast-paced development.
Other foreign investors are choosing Danang to set up their production facilities. Intex Development Company has received its investment certificatet to build a $12-million factory at Hoa Khanh Industrial Zone to produce water filters for swimming pools and water pumps.
Meanwhile, Japan’s Fujikin Inc. is establishing a research and development centre worth $35 million at Danang Hi-Tech Park. The goal of the project is to accelerate scientific research and technical progress in areas such as robotics, drones, and nanotechnology.
As of present, Danang is home to 878 valid foreign-invested projects with the total investment capital of $5.7 billion. In the first eight months of 2021, the city attracted over $162 million in overseas capital, with 29 newly-registered projects and 15 adjusted capital projects, according to data by the Ministry of Planning and Investment.
The foreign inflows into Danang reflect the city’s increasingly important role in the global supply chain of multinational corporations. It is also important for these companies to ensure compliance with transfer pricing tax rules.
Understanding this demand, accounting and advisory firm RSM officially opened a new office in Danang in June. RSM Vietnam’s new office will provide transfer pricing consultation services to companies in both Danang and the central region. The office also helps clients to achieve their long-term objectives by providing audit, tax, and other consulting services.
Le Khanh Lam, chairman of RSM Vietnam, said that tax authorities from various jurisdictions have been collaborating to ensure equitable assignments of taxable profits for cross-borders transactions.
“Every business wants to reduce its taxes, but to do it legally and pragmatically isn’t always that simple. Often tax strategies that look good by themselves can be less realistic, even impractical and unworkable, in the context of your whole business,” said Lam.
“RSM takes a balanced and integrated approach. We focus on your total business picture, not just your next return,” he added. “Our tax consultants help clients define the best overall tax position, designed to save their money, while meeting their larger business goals. Since we regularly provide advice on many aspects of a client’s business, we can see opportunities that other tax specialists might overlook.”
As a result, RSM gives clients practical, commercially-focused, and socially responsible advice from its most experienced tax experts. Therefore, the company can help clients to find the best possible tax solutions for their business.
RSM’s new office in Danang will bring the transfer pricing consultation services closer to clients to facilitate their expansion and business operation in the city. Leveraging its global network and professional service experience, RSM is expected to contribute to improving the investment climate in Danang to attract more foreign investors.