Australian trading company: import-and-distribution entity, customs duty, and AUD reporting

Client

An Australian-headquartered trading company distributing consumer goods (home and lifestyle) across APAC. Vietnam was the next market after Australia and New Zealand.

Challenge

The Australian parent wanted a Vietnam distribution entity to import the goods and sell to local retailers. The CFO in Sydney was concerned about: (1) the import duty on the goods, (2) the CIT incentives (if any) for the distribution activity, and (3) the AUD reporting for the group consolidation.

Approach

We structured the Vietnam entity as a distribution company with the Australian parent supplying the goods at cost plus a margin. We prepared: (1) the IRC and ERC for the distribution company, (2) the import-duty classification and the FTA preference application (where eligible), (3) the inter-company supply agreement, and (4) the AUD management accounts with the FX gain/loss reconciliation.

Outcome

The Vietnam entity is fully operational, with monthly management accounts in AUD. The import duty is being optimised through FTA preferences where eligible. The Australian parent has live visibility into the Vietnam revenue and the FX exposure. We work with the Australian parent's reporting calendar for the quarterly consolidation.

Ongoing engagement

We continue as the Vietnam accounting, tax, payroll, and customs compliance partner. The engagement scope includes the monthly compliance + the customs classification review.