Vietnam

Leading firms

Tier 1
Deloitte 
EY 
KPMG 
PwC 
Tier 2
Grant Thornton 

Market overview

The transfer pricing regime has matured and grown in Vietnam over the past decade but it is only in recent years, and especially the past year, that transfer pricing has become a key focus area of the tax authorities in Vietnam. "Over the year, there has been an increase in the education of tax authorities and developing knowledge which is giving them better skills in enforcing transfer pricing regulations," said Warrick Cleine of KPMG.

A recent change to transfer pricing documentation in Vietnam has created a self-assessment obligation on taxpayers for audit risk, demonstrating a change in focus for the authorities for transfer pricing audits.

Transfer pricing audits have generally been handled by the tax team of the revenue authorities as a wider part of tax audits, but the shifting transfer pricing landscape has led to the establishment of four special TP audit teams, one at the General Department of Taxation and a further three in key provinces.

"These changes will undoubtedly lead to a greater number of transfer pricing audits and extensions in the breadth of coverage. The tax authority has indicated what they see as the likely profile of companies that would be targeted for transfer pricing audits in the coming years including those in real estate and the garment industry," said Monika Mindszenti, head of transfer pricing at PwC.

Advance pricing agreements (APAs) continue to be an area of focus for both taxpayers and authorities alike. While there have been many applications however, none have been concluded.

"The combination of better education from the tax authorities and risk-based audit selection means that companies who were not transfer pricing compliant are going to be in a lot more trouble than they have been in the past. There is going to be a big trend towards compliance and companies getting their transfer pricing right," said Cleine.


Tax authorities

General Department of Taxation, Ministry of Finance
123 Lo Duc St, Hanoi
Tel: +84 4 3971 2310
Fax: +84 4 3971 2286
Email: bbtweb@gdt.gov.vn
Website: www.gdt.gov.vn


Tax rates at a glance

(As of January 1 2016)

Corporate income tax rate 20% (a)
Capital gains tax rate 20% (b)
Branch tax rate 20%
 
Withholding tax
Dividends n.a.
Interest 5%
Royalties 10%
Branch remittance tax n.a.
 
Net operating losses (years)
Carryback 0
Carryforward 5 (c)

  1. The standard corporate income tax rate is 20%. However, tax incentives are available. Enterprises operating in the oil and gas industry are subject to corporate income tax rates ranging from 32% to 50%, depending on the location and specific project conditions. Enterprises engaging in prospecting, exploration and exploitation of mineral resources (for example, silver, gold and gemstones) are subject to corporate income tax rates of 40% to 50%, depending on the project's location.
  2. Gains derived from sales of capital or shares in entities are subject to tax at a rate of 20%. Transfers of securities by foreign investors are subject to presumptive tax of 0.1% on total sales proceeds, regardless of whether the transfer is profitable.

Source: EY 2016 Worldwide Corporate Tax Guide