Southeast Asian nations beef up tax rules for foreign firms


Southeast Asian countries are beefing up tax rules for foreign firms to curb them from diverting income overseas amid rapid growth in the region’s economies.

Vietnam, the Philippines and other Southeast Asian nations are seeking more tax income from foreign firms with local operations by adopting the so-called transfer pricing rules, according to The Nikkei.

The Vietnamese government said it will increase tax revenues from foreign firms in the country that would translate into funding for infrastructure development. A special task force was also set up to scrutinize foreign firms in Vietnam.

Local media have reported that German firm Adidas AG may be avoiding tax payments through improper calculation of profit from transactions between group units.

The Philippines also adopted similar transfer pricing rules this month that require companies to document intragroup transaction prices in advance, The Nikkei reports. The Southeast Asian nation also drafted plans for stricter tax investigations.

Indonesia and Malaysia have outlined detailed rules about transfer pricing while Thailand, where many Japanese firms operate, is expected to adopt relevant regulations this year.

Analysts raised concerns that the local authorities may impose excessive taxes on foreign companies and drive away investment in the region.

These Southeast Asian countries have previously provided tax incentives for foreign companies setting up plants in the local market as a way to help create jobs.