Asia-Pacific Transfer Pricing Handbook

Chapter Thirty-Two

Vietnam Transfer Pricing

Vietnam Introduced Transfer pricing regulations in 2003 and then introduced formal transfer pricing regulations on December 19, 2005, through Circular 117/2005/TT-BTC. Vietnam became a World Trade Organization (WTO) member in 2006. Vietnam enacted transfer pricing regulations by statute on July 1, 2007, and the Ministry of Finance has been implementing the transfer pricing provisions. We expect the Ministry of Finance to promulgate new regulations and that these regulations will call for stricter enforcement.

The Vietnamese transfer pricing regulations provide guidance as to the definition of related party relationships, transfer pricing methodologies, benchmarking standards, mandatory transfer pricing documentation requirements, and annual filing requirements. The Vietnamese tax authorities define arm’s length price as being an amount that the taxpayer objectively sets in market transactions between independent parties.

The Vietnamese transfer pricing provisions apply to inbound and to outbound related party transactions. The pricing provisions do not have a size criterion, making virtually all taxpayers subject to scrutiny. Most significantly, the Vietnamese transfer pricing provisions apply to tax-favored domestic transactions through lower rates, tax holidays, and different tax profiles. We expect the Vietnamese government to focus on international transactions, but the transfer pricing provisions cover both domestic transactions ...