Vietnam Tax Alert 2016/Issue 6 | KPMG | VN

Vietnam Tax Alert 2016/Issue 6

Vietnam Tax Alert 2016/Issue 6

On 7 July 2016, Intergovermental Agreement ("IGA") Model 1 between Vienam and the U.S. Governments officially entered into force, accordingly, Financial Institutions ("FIs") in Vietnam officially became Reporting Vietnamese Financial Institutions ("PFFIs") Model 1.


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Intergovermental Agreement - IGA in force

It is noted from the Internal Revenue Services (“IRS”) website that Vietnam hasbeen treated as having an IGA Model 1 in force on 7 July 2016. Accordingly, from 7July 2016, FIs in Vietnam are officially regarded as PFFIs Model 1.

Memorandum of Understanding clarifying critical points in IGA

A memorandum between the Governments of Vietnam and the US has alsobeen uploaded to the IRS website clarifying several critical points of the IGA. Thefollowings are notable:

  • The first reporting date for Vietnam will be the first 30 September after theIGA enters into force. Hence, the first report of FIs in Vietnam will be at 30September 2016.
  • Deemed-compliant FFIs or exempt beneficial owners include (i) Bank for SocialPolicies and Vietnam Development Bank; People’s Credit Funds includingthe Co-operative Bank of Vietnam; and Microfinance institutions in Vietnam.Nevertheless, the deem-compliant/exempt status is subject to these entities’satisfaction of the relevant conditions described in Annex II of IGA.
  • In the case of securities registered in the Vietnam Securities Depository(“VSD”) held by or through one or more other Reporting Vietnamese FinancialInstitutions, the relevant Financial Accounts are to be treated as held by suchother Reporting Vietnamese Financial Institutions, and such other ReportingVietnamese Financial Institutions are to be responsible for any reportingrequired with respect to such Financial Accounts. Hence, it is understood thatVSD also needs to register as a Reporting Vietnamese Financial Insititution andobtains a GIIN.

In the coming time, the State Bank of Vietnam (“SBV”) and other competent authorities will soon issue detailed guidance on FATCA implementation in Vietnamin accordance with the signed IGA. KPMG recommends FIs to prepare resourcesin place to meet compliance requirements as soon as detailed guidance is issued.

© 2018 KPMG Tax and Advisory Limited, a Vietnamese limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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