Insights: International Turnkey Contracting in ASEAN

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How to successfully structure your EPC-projects

Over the past two decades, the number of turnkey or "Engineering, Procurement, and Construction" (EPC) projects in Southeast Asia has grown significantly. This trend is largely driven by the increasing liberalization of various economic sectors across the region. In the context of international business, EPC projects typically involve the construction and delivery of fully operational facilities. These projects are most commonly seen in industrial plant construction and machinery installation, often requiring highly specialized technical expertise to assemble and commission complex systems successfully. 
In Southeast Asia, the energy sector stands out as a particularly active area for EPC projects. Market deregulation in several countries has opened the door for independent power producers, spurring investments in infrastructure such as power generation and water treatment facilities. These developments have enabled non-state actors to participate in large-scale infrastructure initiatives through concession agreements.
The scope of EPC services generally includes the design, procurement, construction, installation, and commissioning of a facility at the client’s site. Most contractors understand the importance of addressing both local and international tax implications. For example, the duration and structure of a project may lead to the creation of a permanent establishment, carrying specific financial and compliance risks. Given their complexity, EPC projects also demand detailed planning with regard to local investment laws, labor regulations, and immigration requirements. 
In this "Themenspecial," we provide a comparative overview of key considerations for EPC contractors operating in Southeast Asia. Our international experts offer valuable insights into the tax, investment, and labor law frameworks in Indonesia, Malaysia, Singapore, Thailand and Vietnam.​​

Indonesia

International Turnkey Contracting in ASEAN

Based on Indonesian Income Tax Law, on-site works related to construction projects, installation and assembly automatically trigger a Permanent Esta­blish­ment without any time limitation. However, based on the DTA, a building site or construction or installation project constitutes a permanent establishment only if it lasts more than six months. Read more »

Malaysia

International Turnkey Contracting in ASEAN

Generally, a permanent establishment is triggered where the foreign company establishes a fixed place of business in Malaysia through which they carry, wholly or in part, their business operations. The term permanent establishment especially includes a place of management, a branch, an office, a factory, a workshop and a mine, an oil or gas well, a quarry or any other place for the extraction of natural resources. Read more »

‭(Hidden)‬ Myanmar

International Turnkey Contracting in ASEAN

Under the Myanmar Companies Law, every foreign natural person or legal entity that conducts any business activity in Myanmar for more than 30 days and/or with more than one transaction being involved, will have to register a legal entity with the Directorate of Investment and Company Registration in Myanmar. Read more »

Singapore

International Turnkey Contracting in ASEAN

Under the Singapore domestic tax law, a PE is triggered in Singapore where, among others, a person (which includes corporations) carries on supervisory activities in connection with a building or work site or a construction, installation or assembly project. Do note that there is no minimum time threshold stipulated for PE exclusion. Read more »

Thailand

International Turnkey Contracting in ASEAN

In general, the Thai Revenue Code defines Perma­nent Establishment rather widely. The law assumes a permanent establishment if a foreign company has an employee, an agent or a go-between for carrying on business in Thailand and receives income in Thailand. Read more »

Vietnam

International Turnkey Contracting in ASEAN

According to the DTA, a building site-, construction- or installation-project constitutes a PE only if it lasts more than six months. It should be noted that under the Vietnamese guidance on DTAs, the period of six months is calculated from the date the contractor commences the preparation for the construction in Vietnam, such as establishing its office and planning the construction design. Read more »

last updated on 26 June 2025​

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