Vietnam Transfer Pricing Policy

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TP-Q-10
Why kinds of scenarios will be adopted TP policy? What is the relevance of DTA and TP policy?

TP-A-10

When Vietnam Tax entity would like to pay out whatever business profits, Royalty, Technical Services fees, Interests, trading amount etc., it will adopt DTA tax rate. Its judge criteria, please see the Vietnam Treaty Page.
But if want to verify the above-mentioned amount if reasonable, will adopt Vietnam TP Policy.

TP-Q-20:
越南在甚麼情況下, WFOE 外商投資企業不需要同時處理TP 申報和文件申報?
What are the scenarios in Vietnam, that a Wholly Foreign-Owned Entity (WFOE) is exempted from compliance of Transfer Pricing (TP) declaration and TP documentation?

TP-A-20:
You are exempted from TP declaration and TP documentation if you fall into any 2 of the below scenarios:

Scenario 1:

Only engage in transactions with domestic related parties,
Taxpayer and related parties have the same CIT rates; and
None of the parties enjoy tax incentives.

*Still require submitting Part I, Part II in Appendix I to declare an exemption.

Scenario 2:

Annual Revenue less than VND 50 billion (USD 2.2 million) and Related party transactions less than VND 30 billion (USD 1.3 million); Or Has an Advance Pricing Agreement (APA)
Engage in “simple functions” and do not generate revenue.

TP-Q-30:   

在越南甚麼情況下, WFOE 外商投資企業需要向該國的稅務局發送TP 申報? 甚麼是申報單名稱?

What are the scenarios in Vietnam, that a Wholly Foreign-Owned Entity (WFOE) is required to submit a TP declaration to the country’s tax bureau? What is the name of the TP declaration form?

TP-A-30:

At least one related party (domestic or International) transaction. Appendix I.

TP-Q-40:   

在越南甚麼情況下, WFOE 外商投資企業需要向該國稅務局發送TP 申請和文件? 甚麼 declaration 表單名和文檔名?
What are the scenarios in Vietnam, that a Wholly Foreign-Owned Entity (WFOE) is required to submit TP declaration and TP documentation to the country’s tax bureau? What are the name of the TP declaration form and TP documentation forms?

TP-A-40:
At least one related party (domestic or International) transaction – TP declaration form (Appendix I).
Annual revenue >= VND 50 billion and related party transactions >= VND 30 billion – TP documentation form (Appendix II, III).
Consolidated group revenue >= VND 18,000 billion – TP documentation form (Appendix IV).

Vietnam TRANSFER PRICING for professionals

Overview

The latest Decree No. 132/2020/ND-CP (Decree 132) on transfer pricing rules in Vietnam was issued on 05 November 2020, replacing Decree 20.
In general, transfer pricing rules in Vietnam are aligned with the OECD Transfer Pricing Guidelines.
In Vietnam, transfer pricing rules apply to domestic and international transactions engaged with a person with a related party relationship.

Supplement related party relationship

Clause 2, Article 5, Decree 132 prescribes types of related party relationships as follows (the list is not exhaustive):
*Having 25% or more equity ownership (directly or indirectly or common ownership) with the other party.
*Engaged in the borrowing of 10% or more of the capital amount with the other party.

Types of transactions covered

*Sale or purchase of inventory or other property.
*Hire and rent with(out) rental fee.
*Provision of services.
*Interest on loans or advances.
*Joint use of resources.
*Cooperation in the utilization of human resources, sharing of costs between related parties.

Acceptable Transfer Pricing method

*Comparable Uncontrolled Price (CUP)
*Resale price
*Cost plus
*Comparable profits
*Profit split

Documentation

Taxpayers are exempted from declaration and preparation of TP documentation, Clause 1, Article 19, Decree 132 stipulates that taxpayers are exempted from the declaration of Part III, Part IV in Appendix I (but must declare the grounds for exemption in Sections I and II in Appendix I) and TP documentation if 3 of the conditions below are met: –

*Only engage in transactions with domestic related parties,

*Taxpayer and related parties have the same CIT rates; and

*None of the parties enjoy tax incentives.

You are also exempted from preparing transfer pricing documentation if one of the following occurs:

*Annual Revenue less than VND 50 billion (USD 2.2 million) and Related party transactions less than VND 30 billion (USD 1.3 million); Or

*Has an Advance Pricing Agreement (APA)

*Engage in “simple functions” and do not generate revenue.

Due dates and respective threshold:

Please be aware of the below Warning:
The above contents are digested by Evershine R&D  and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Hanoi Evershine BPO Service Limited Corp.
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or
Contact us by WeChat or Skype or Whatsapp in the day-work-time of Vietnam  (GMT+8)
The Engaging Manager from Headquarter
Ms. Judy Wang, CPA(Taiwan) Speaks in both English and Chinese.
WeChat: Judy_Evershine
skype: Judy Wang

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