We help design and implement Global TP Policy / review Agreements for Multinational Corporations. We also provide TP litigation support services.
Transfer Pricing compliance requirements by delivering meticulously prepared Documentation as per Local TP Regulations and global standards.
We assist in identifying gaps by providing health check up from Legal, Corporate and TP documentation perspective.
We have access to various public financial and company databases, industry and directories which assist us to render comprehensive TP analysis.
The Vietnamese transfer pricing regulations are largely consistent with the 1995, 2010, 2015 and 2017 OECD Guidelines and the UN TP Manual, with some modifications reflecting the local perspective. Some aspects of the OECD BEPS Actions have been included in Decree 132, Transfer Pricing Decree 20 and Transfer Pricing Circular 41, which include:
– the three-tiered transfer pricing documentation requirement (BEPS Action 13);
– limitations on tax deductions for interest expenses (BEPS Action 4); and
– the concept of DEMPE with respect to the transfer pricing treatment of intangibles (BEPS Action 8)
Decree 132 contains the approach set out in BEPS Action 13 (Guidance on Transfer Pricing Documentation and Country-by-Country Report). Specifically, according to article 18(4) of Decree 132, a taxpayer is obliged to prepare and maintain three tiered transfer pricing documentation (including CbC report). This rule makes the Vietnamese transfer pricing documentation requirement more in line with the OECD Guidelines and BEPS’s recommendations which further strengthens the legal basis for transfer pricing administration and other anti-avoidance efforts.
Article 18(4) of Decree 132 requires taxpayers to prepare a three-tiered transfer pricing documentation including the Local File before the submission of their corporate income tax returns and they must maintain and provide the documentation including the Local File to the tax authorities upon request in an audit.
According to article 18(4) of Decree 132, the Local File covers the information about related-party transactions, policies and transfer pricing methods for related-party transactions which are prepared and kept in the offices of the taxpayer according to the list of the required information and documents prescribed in Appendix 2 attached to Decree 132.
The required items of information/documentation of the Local File are generally in line with the OECD’s recommendations. However, the taxpayer must use Appendix 2 indicating whether the items of information/documents of the Local File have been prepared and maintained and attach this appendix together with the corporate income tax return.
The Vietnamese transfer pricing regulations require the Master File as part of three-tiered transfer pricing documentation from 2017 onwards. The regulation requires taxpayers to prepare a three-tiered transfer pricing documentation (including the Master File) before the submission of their corporate income tax returns and they must maintain and provide the documentation (including the Master File) to the tax authorities upon request in an audit.
The required items of information/documentation of the Master File are generally in line with the OECD’s recommendations. However, the taxpayer must use Appendix 3 indicating whether the items of information/documents of the Master File have been prepared and maintained and attach this form together with the corporate income tax return. The Vietnamese transfer pricing regulations do not address the language aspect of the compliance transfer pricing documentation and forms, including Appendix 3. However according to local tax laws and practice, the information/documents submitted to the tax authorities must be in Vietnamese.
However, article 19 of Decree 132 specifies certain exemptions with respect to the transfer pricing compliance. Accordingly, if the taxpayer qualifies regarding one of the following scenarios, it is exempted from three-tiered transfer pricing documentation (including Master File) but is required to declare and submit Appendix 1 as part of annual CIT finalization:
– has sale revenue of less than VND 50 billion (approximately USD 2.15 million or EUR 1.97 million) and the value of its related-party transactions is less than VND 30 billion (approximately USD 1.29 million or EUR 1.19 million). In this case, the taxpayer is exempted from the three-tiered transfer pricing documentation obligation, however it is required to declare and submit Appendix 1 as part of its annual corporate income tax return.
– engages in simple functions, has revenue of less than VND 200 billion (approximately USD 8.61 million or EUR 7.91 million) and achieves a ratio of earnings before interest and tax (EBIT) to revenue of at least 5% for the distribution function, at least 10% for the manufacturing function and at least 15% for the processing function; or
– has signed an APA and submitted annual APA report.
A Vietnamese Ultimate Parent Entity with global consolidated revenue in a tax period of VND 18,000 billion or more must prepare Appendix 04 (CbCR) and submit it to the tax authority no later than 12 months after the financial year-end of the ultimate parent entity. For a Vietnamese taxpayer whose overseas UPE is obliged to submit a CbC report in its country of residence, the Vietnamese tax authority will obtain that CbC report by engaging in the AEOI in accordance with its commitment under the International Tax Agreement of Vietnam. The Vietnamese taxpayer submits the written notification on the information of the UPE or the appointed organization to the Vietnamese tax authority no later than the financial year-end of the corporation.
The tax authorities gives preference to local comparable companies. However, in absence of the same, pan-Asian comparable companies are accepted.
Principal North America Practice
12+ years experience in Transfer Pricing & International Taxation in multiple jurisdictions including S.E Asia, USA and India. He has worked with Deloitte Haskins & Sells, Malaysia and with Ernst & Young in Transfer Pricing division.
He is a member of Malaysian Institute of Accountants with enriched experience in Malaysian Transfer Pricing Documentation.