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.
(As of January 1 2016)
|Corporate income tax rate||20% (a)|
|Capital gains tax rate||20% (b)|
|Branch tax rate||20%|
|Branch remittance tax||n.a.|
Net operating losses (years)
Source: EY 2016 Worldwide Corporate Tax Guide