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Vietnam: APA: An effective tool for transfer pricing management


Thuan Pham

The Vietnamese tax authorities have conducted a number of tax audits focusing on transfer pricing abuses in recent years, including by companies with foreign investment. While no definitive judgments have been issued, several companies are suspected of having abused the transfer pricing regulations and committing tax evasion. In an effort to reduce tax evasion and tax fraud, and to achieve efficient tax governance, an amendment to the Law on Tax Governance was introduced on November 20 2012, along with the introduction of an advance pricing agreement (APA) programme, with the aim of providing taxpayers and tax authorities with tax certainty, transfer pricing planning, protection from tax evasion, and tax efficient management.

Under the Law, the APA is defined as a binding written agreement between tax authorities and taxpayers and/or tax authorities of other jurisdictions which have signed a tax treaty with Vietnam. The APA determines the basis for tax calculation, and transfer pricing methods or prices based on market price. The APA must be established before the taxpayer can submit their tax declarations.

The amended Law went into effect on July 1 2013 and to assist its implementation, the Government issued Decree 83/2013/ND-CP on July 22 2013, effective as of September 15 2013. Under the Decree, an APA must include:

  • Name and address of the related parties joined in the APA;

  • Description of the related transactions under the scope of the APA;

  • Method of determining taxable price, the mode of calculation, figures accounting for price, gross profit ratio, net profit ratio which are the basis for determining taxable value in connection with related transactions under scope of the APA;

  • Significant assumptions which may have a material influence and impact on the implementation of the APA (including analysis and forecast);

  • Clauses on responsibility and liability of the taxpayers;

  • Clauses on responsibility and liability of the tax authorities (including mutual agreement procedures between relevant tax authorities when necessary);

  • Effective application clause;

  • Other clause regarding the settlement of tax liability in connection with APA commitment; and

  • Annexes (if any).

The APA will be effective for five years and can be extended for a further period of no more than five years. The effective date of the APA must be after the date taxpayers submit the application for APA. Taxpayers or tax authorities have the right to request the suspension or revocation of the application of the APA, before the official expiry date of the APA.

The General Department of Taxation of Vietnam has been designated a competent authority for negotiating, discussing, and entering into an APA with taxpayers or foreign tax authorities.

Thuan Pham (


Tel: +84 8 3914 7272

Fax: +84 8 3915 4248


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