Japanese manufacturer: production entity, CIT incentives, and JPY reporting to the Tokyo parent

Client

A Japanese-headquartered electronics manufacturer with a global production footprint. Vietnam was selected as a low-cost production hub for APAC.

Challenge

The Japanese parent wanted a Vietnam production entity with CIT incentives (encouraged sector + encouraged zone). The CFO in Tokyo was concerned about: (1) the eligibility for the 10% CIT rate and the tax holiday, (2) the JPY reporting for the group consolidation, and (3) the J-SOX-aligned internal controls.

Approach

We advised on the IRC application with the high-tech and encouraged-zone project description. We prepared: (1) the IRC and ERC, (2) the CIT incentive application with the supporting documents, (3) the Local File with a benchmarking study for the cost-plus mark-up on the inter-company supply, and (4) the JPY management accounts with the J-SOX controls documentation.

Outcome

The Vietnam entity is fully operational, with monthly management accounts in JPY. The CIT incentive was approved by the GDT and the project is enjoying the 10% rate and the tax holiday. The Japanese parent has live visibility into the Vietnam production cost and the JPY exposure. We work with the Japanese parent's reporting calendar for the quarterly consolidation.

Ongoing engagement

We continue as the Vietnam accounting, tax, payroll, TP, and CIT incentive compliance partner. The engagement scope includes the annual CIT incentive review.