8 July 2021
The Ministry of Finance issued the Circular No. 45/2021/TT-BTC dated 18 June 2021 guiding execution of the Advance Pricing Agreement (APA) mechanism used in the tax administration of enterprises involved in related-party transactions with the following contents:
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The transactions applied APA are the business transactions between related parties, except for business transactions related to goods and services requiring price stabilization within the scope of the State’s regulations on prices.
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The transactions applied must fully satisfy the following conditions:
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Actual transactions arise in the taxpayer’s production and business activities and will continue to take place during the period of application of APA.
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Transactions have any basis for determination of the nature of transaction deciding tax liability, and any basis for analysis, comparison, and selection of independent comparable according to the provisions of law.
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Transactions are not involved in tax disputes or complaints.
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Transactions are made in a transparent manner, not for tax evasion, avoidance, or misuse of Tax Agreements.
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Principles of application: APA is applied on the principle that tax authorities and taxpayers or Vietnamese tax authorities and partner tax authorities and taxpayers together cooperate, exchange and negotiate on the application of tax regulation on the implementation of corporate income tax obligations for related-party transactions within the scope of APA in accordance with the principles of independent transactions and the principle that the nature of operations, transactions determine tax obligations.
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The General Department of Taxation conducts the application of taxpayers for APA to check, compare, determine and evaluate the completeness, accuracy, legality, reasonableness and validity of the information, data provided by the taxpayer to provide an assessment of the associated transaction price determination method, the selected comparison object is suitable for determining the price, profit margin or distribution ratio. declare profits for transactions within the scope of application of APA.
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Regulations on the rights, obligations, and responsibilities of taxpayers. In addition, it stipulates the powers and responsibilities of tax authorities.
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The validity period of a signed APA is up to 03 tax years, but it must not exceed the actual number of years the taxpayer has operated in production and business, declared and paid corporate income tax in Vietnam.
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