Worldwide transfer pricing reference guide 2014

Vietnam (continued)
Relevant regulations and rulings (continued)
• Intangible transactions
• Payment of royalty for technology transfer and trade mark
• Inter-company service transactions
• Others
• Significant loan interest
• Disposal of fixed assets
The transfer pricing audits in 2013 are currently focusing on certain industries including the following:
• Garments, textiles and footwear industries
• Real estate
• Construction
• Automotive
• Motorbike assembly
• Electronics
Furthermore, the tax authorities noted some inadequacies in the documentation provided by the taxpayers; i.e., the documents
provided/made available by taxpayers were seen as not compliant with Circular 66, specifically the sections relating to company analysis,
industry analysis, benchmarking, etc., Notably, though tax regulations allow valid invoices and inter-company agreements as supporting
documents for Corporate Income Tax or VAT purposes, the same are not sufficient or equivalent to the required transfer pricing
documentation under Circular 66.
These recent developments with respect to enhanced legislation, tax authority’s capacity building and the increasing sophisticated
transfer pricing audits evidence that transfer pricing continues to be the national focus of Vietnam’s tax authority for the
period 2012–2015.
OECD guidelines treatment
Circulars 117 and 66 are generally based on the OECD Guidelines. How the GDT will apply the OECD Guidelines in interpreting the
principles under the Circulars remains to be seen based on the first few years of implementation of the Circulars.
Priorities/pricing methods
Circular 66 permit the use of the following methods: CUP, Resale Price, Cost Plus, CPM (or TNMM) and Profit Split. Taxpayers must use
the most appropriate method under the regulations. There is no hierarchy among the methods, although recent practice shows that the
Vietnam tax authority has a growing preference for the CUP method.
Transfer pricing penalties
The tax authorities may make adjustments to corporate income tax liability in the following cases:
• Failure to disclose, or incomplete disclosure, of related party transactions
• Failure to produce information, documents or source documents within 30 working days of a request by the tax authority
• Intentional erroneous application of the provisions of the Circulars and failure to produce required documentation within 90 calendar
days of the date of request by the tax authority
Administrative penalties ranging from VND500,000 to VND5 million may be imposed for failure to comply with transfer pricing
documentation and disclosure requirements, and an interest penalty of 0.05% of the outstanding tax due may also be imposed if a
transfer pricing adjustment is made. Under the Amended Law on Tax Administration No. 21/2012/QH13, this interest penalty increases
to 0.07% per day if outstanding tax due is over 90 calendar days. Taxpayer is also subject to a tax penalty of 20% of additional tax in case
of incorrect declaration. Additional penalties of up to three times the outstanding tax due may be imposed in case of tax evasion or fraud.
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