Vietnam introduces new controls over transfer pricing

Vietnam introduced regulatory changes in May 2017 that aim to make transfer pricing practices that divert funds away from the country’s tax system and into company coffers very much harder.

To clarify the regulatory changes, the government has issued a decree on the management of transfer pricing.

Significant changes

The decree expands on existing regulations and introduces new concepts under the OECD guidelines for fighting base erosion and profit shifting (BEPS) tax avoidance strategies.

Significant changes have been made in tax reporting and evaluation of related-party transactions include a three-level tax declaration, new transaction registration forms, and new guidance on expenses claimed in related-party transactions.

Commodity price comparisons

Operating profits declared by tax paying companies or individuals will be compared with similar firms or people using a master database containing domestic data as well as global data on prevailing profits of companies and market prices of commodities.

In some transfer pricing audit cases where taxpayers fail to submit the forms or the transfer pricing documentation within the statutory timeline, the tax authorities will have absolute power to assess the price or profits of the taxpayers based on their secret master database.

Categories: Trade Based Financial crimes News

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