Let us review some events related to to transferpricing-avoidance activities of Vietnam Tax Authority up to today:
Documents system mentioned above is considered as the tool, the legal basis for the combat of transfer pricing activities of Tax Authority. And the issuance of Decision 1250/QD-BTC aproving action program to control transfer prices, as well as the establishment of Transfer Pricing Inspection Departments and the specific provisions on the functions, tasks of these departments at both the General Department of Taxation and provincial Tax Department level shows the determination of Ministry of Finance in this combat.
The actual implementation.
The fact that in recent years, the Ministry of Finance has directed Tax Authority at all hierarchies to focus inspection on enterprises with signs of associated transactions or transfer pricing, on Foreign Direct Investment enterprises, on enterprises operating for many years but not inspected, on enterprises enjoying CIT incentives... The Tax Authority was initially successful with this orientation. According to statistics of the General Department of Taxation, in only 09 months of 2013, the Tax Authority has been inspected and checked for 1,223 loss enterprises and enterprises with signs of transfer pricing, collected arrears, penalized, claimed 481 billion VND and reduced loss of 1,697 billion VND.
Under the provisions of Circular 117 and Circular 66, enterprises incurring transactions with associated parties are required:
Without these above dossiers, when taxpayers are inspected on transfer prices with associated transaction, the Tax Authority may impose a fixed tax amount, and penalizes late payment for detected taxes (if any) (interest on late payment of 0.05%/day, equivalent to 18.25%/year).
To minimize this risk, we recommend the Company to pay attention to the above points.
Should the Company need support in this issue, we are willing to provide the related services as following: