Worldwide transfer pricing reference guide 2014

Vietnam (continued)
Transfer pricing penalties (continued)
Vietnamese law allows for criminal proceedings against tax payers if it is proven that there is a significant tax evasion. According to
the Vietnamese Criminal Law, if the underpaid tax amount is VND100 million (approximately US$5,000) or more, the taxpayer may be
subject to tax penalties under criminal proceedings.
Penalty relief
Penalties may be mitigated by timely and adequate disclosure of the related party transactions on forms GCN-01/TNDN (Appendix
1-GCN/HTQT of Circular 117) and GCN-01/QLT (Appendix 1-GCN/CC of Circular 66), and by the preparation and timely submission of
transfer pricing documentation.
Documentation requirements
Contemporaneous documentation is required by Circular 66. Documentation must be provided within 30 working days of the tax
authority’s request. The documents must be in existence when the transaction occurs and must be updated during the performance
of the transaction. For penalty purposes, a taxpayer is considered to have satisfied the documentation requirement if it maintained
documentation showing that the taxpayer has reasonably concluded that, given the available data and the applicable pricing methods,
the method used (and its application) provided the most reliable measure of an arm’s length result under the principles of the most
appropriate method rule.
The principal information and documents required by the regulations are:
• Information on transactions between affiliated parties and the taxpayer
• Information and updated reports on strategy for development, administration and control between affiliated parties
• The pricing policy for transactions in relation to each group of products in accordance with the general guidance of affiliated parties and
the taxpayer
• Documents and reports on the process of development, business strategy, projects, production, business or investment plans
• Regulations and procedures for financial statements and internal control reports of the company and of affiliated parties to the
transactions
• A diagram of transactions and documents describing transactions, including information on parties to transactions, order and
procedures for payment and delivery of products
• Documents specifying properties and technical specifications of products, the breakdown of costs (or cost) of one product, selling price
of products, total amount of products produced or traded and sold in the period (specifying such items on the basis of the related party
transaction and an independent transaction, if any) and the quantity of products
• Information, documents and source documents concerning the process of negotiation, signing, performance and liquidation of economic
contracts and agreements related to transactions (usually including a description of products, place of transaction, form of transaction,
value of transaction, terms of payment, payment documentation, period of performance, minutes of meetings or instructions of the
management regarding the process of negotiation, signing and the performance of a transaction)
• Information, documents and source documents related to economic conditions of the market at the time of the related transactions
affecting the method of calculation of a price for transactions (for example, changes in exchange rates and policies of the government
affecting prices in transactions and financial incentives)
• The pricing policy for selling and purchasing products and the procedures for control and approval of prices
• Information, documents and source documents used to select the most appropriate method, including data used for comparative
analysis and adjustment of significant differences
• Other information or documents used to select and apply the methods
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