Singapore SaaS platform: FCT on royalties, TP for cost-share, and a clean entry into Vietnam
When a Singapore-headquartered SaaS company entered Vietnam, it needed a Vietnamese operating entity to sell subscriptions to local customers, with royalties paid to the Singapore IP holder. We set up the Vietnam entity, structured the FCT exposure, and aligned the inter-company agreements with the TP documentation.
Client
A Singapore-headquartered B2B SaaS company providing workflow automation to mid-market customers in APAC. Approximate ARR at engagement: USD 8M; customers in 7 APAC markets including Vietnam.
Challenge
The Singapore parent had been selling to Vietnamese customers via a reseller arrangement, but the local partner was exiting. The company needed a Vietnamese entity to sell directly, and wanted to ring-fence the IP in Singapore with a royalty from Vietnam. The CFO in Singapore was concerned about: (1) the FCT exposure on the royalty, (2) the TP documentation to support the royalty rate, and (3) the Vietnamese VAT exposure on the cross-border service.
Approach
We structured the Vietnam entity as a limited-risk distributor: Vietnam-sourced subscription revenue is booked in Vietnam, and a royalty (8% of net revenue) is paid to Singapore for the use of the platform IP. We prepared: (1) the inter-company services and royalty agreements, (2) the Local File with a benchmarking study supporting the royalty rate, (3) the FCT registration and the monthly FCT filings, and (4) the cloud-infrastructure cost-share agreement with a separate benchmarking study.
Outcome
The Vietnam entity is fully operational, with monthly management accounts delivered to the Singapore CFO in SGD. The TP documentation was prepared contemporaneously and is available for GDT review. FCT is filed on time, and the royalty remittance is processed via the bank with the SBV notification. The Singapore CFO has live visibility into the Vietnam numbers via Xero.
Ongoing engagement
We continue as the Vietnam accounting, tax, payroll, and TP compliance partner. The engagement scope is the monthly compliance + annual TP documentation. We work with the Singapore group's reporting calendar for the quarterly consolidation.
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