VATJ - Study on the tax avoidance According to an investigation by Finance Uncovered , two multinational oil firms are using secretive court hearing to prevent Vietnamese government from collecting taxes on the profit of their major deal in the past. The case follows the sale of two companies owned by a UK subsidiary of US energy giant ConocoPhillips # ConocoPhillips Gama Ltd, and ConocoPhillips Cuu Long. They were sold to a UK company owned by the Anglo-French oil firm Perenco. According to accounts filed at Companies House in the UK, ConocoPhillips profited $896m from the sale and paid no taxes on the capital gain.

To this situation, ConocoPhillips# spokeman said, #The sale was between two UK-incorporated and resident entities with no taxable presence in Vietnam. The target companies are also UK companies. As aresult, no taxes were owed on the sale in Vietnam.# However, Vietnamese government holds a different view; Vietnam has the right todo so under the terms of the UK-Vietnam tax treaty. The Vietnamese government has signalled its intention to tax the transaction. If the profits on the deal were subject to the standard corporation tax rate in Vietnam, then ConocoPhillips could have to cough up an estimated $179m to the Vietnamese government.

Currently, ConocoPhillips is usingBilateral Investment Treaty Mechanism of the UN to launch a pre-emptive legal strike against Vietnam#s intention to levy an estimated $179m capital gains tax charge. The result of this case could mark a significant shift in the way multinationals attemptto avoid paying taxes to poorer countries. If Vietnam is successful, there could be profound implications for other developing countries, which have often seen Western companies make huge profits on their investments, only to walk away with them tax-free. Nevertheless, if ConocoPhillips win the court, other multinationalscompanies can take advantage of secretive and prohibitively expensive court for their profit shifting activities among developing countries.

Regarding to the above-mentioned scenarioand with the view on a better tax system for Vietnam, Vietnam Alliance for Tax Justice (VATJ), with the support from Oxfam Vietnam and cooperation with General Department of Taxation (GDT), will conduct a study on the tax avoidance of international oil companies in Vietnam: the case of ConocoPhillips and Perenco. The research aims to: (i) provide evidence on promoting the rule of law society, especially for the case ConocoPhillips and Vietnamese government; (ii) promote better tax policy for Vietnam tax system; (iii) provide a good reference for the right of developing countries against multinational corporates on tax avoidance.
The research project will work on following issues:
- Review the legal framework of Vietnam tax system relating to the case of CononoPhilips to confront the underlying argument about the relationship between the 2015 decree and 2008 law.  For instance, several #Big 4# accounting firms have suggested that the right to tax indirect transfers only existed after 2015 ((See, e.g.  https://www.ey.com/sg/en/services/tax/ey-you-and-the-taxman-issue-4-2017-investing-into-vietnam-through-the-tax-lens andhttps://home.kpmg/content/dam/kpmg/vn/pdf/tax-alert/2016/vn-2016-september-tax-alert-issue-10-en.pdf)
- Study examples of Vietnam taxing the the gains from other pre-2015 indirect transfers of assets that we could confront the underlying argument about the relationship between the 2015 decree and 2008 law
- Give recommendations to ConocoPhilips and the government of Vietnam on tax policy relating to this case and in general