Additional provisions on anti-transfer pricing

	Strongly deal with enterprises transferring price for tax evasion
	Establishing a database of transfer pricing and tax evasion
	Customs Department and Tax Department of Ho Chi Minh City build scheme of anti-losses of tax revenues

Mr. Nguyen Anh Tuan speaks at the press conference.

Implementing the Government's Resolution No. 19-2016 / NQ-CP on major tasks and solutions to improve the business environment and raise the national competitiveness of Vietnam for 2016-2017, towards 2020, the Ministry of Finance has presided over and co-ordinated with relevant Ministries and agencies to study, formulate and submit to the Government for promulgation of Decree No. 20/2017 / ND-CP regulating tax administration for enterprises with related transactions.

According to Mr. Cao Anh Tuan, the Deputy Director-General of the General Department of Taxation, the formulation of Decree No. 20 aims to improve the legal basis for tax administration for enterprises with related transactions, improve compliance law of taxpayers; create a fair and healthy business environment for enterprises, raise the effectiveness and efficiency of tax collection management and create favourable conditions for the modernization of revenue management; promote the reform of tax administrative procedures in a simple, clear and transparent manner; reduce costs, time of tax obligations; and encourage taxpayers to well implement the mechanism of self-declaration, self-calculation and self-payment.

In addition, these regulations also aim to prevent, limit the transfer of profits abroad, protect revenue sources for Vietnam; and ensure the harmonious rights and legitimate interests of enterprises.

Regarding brief information on Decree 20, Mrs. Nguyen Thi Lan Anh – the Deputy Director of the Inspectorate Department, under the General Department of Taxation said: "Regulations on tax administration for enterprises with related transactions are built on the basis of promoting regulations in the past, solving some of the previous bottlenecks, updating and adding new management solutions adopted by the BEPS (Action Plan on Base Erosion and Profit).

Mrs. Nguyen Thi Lan Anh answers questions of the press.

One of the contents of the Decree which is paid attention by mass media is the obligation to declare, determination of the price of related transactions and prepare records of related transaction prices, which requires the parent company having offices in Vietnam with a global consolidated turnover of 18,000 billion vnd or more to make inter-country profit reports and send them to the tax offices.

Explaining the figures, Mrs. Lan Anh said that during the policy making process, the drafting agency collected international experiences and reviewed the situation in Vietnam in order to provide legal basis reasonably.

Currently, in order to improve the transparency of transfer pricing management, countries in the world are reviewing and amending the regulations on tax administration for enterprises with related transactions in the form of requiring multinational corporations to provide a holistic, comprehensive overview of the whole value chain, channels of value creation, tax paid in the countries, etc. through a pricing profile with 3 levels: global profile, national profile, and interstate profit report.

These records will improve the quality of risk management for transfer pricing of tax authorities and reduce the burden of compliance costs for taxpayers through the coordination mechanism of information among countries.

The requirement that the parent companies headquartered in Vietnam have a global consolidated revenue threshold of 18 trillion vnd or more must be obliged to make a transnational profit report from research and international experience. Currently, this figure in many countries is about EUR 750 million.

In addition to these regulations, tax authorities will also have a mechanism to exchange information to ensure more effective and transparent management.

On the issue of inspecting and examining the transfer pricing recently, a representative of the General Department of Taxation stated: From 2010 to 2015, the tax authorities examined and adjusted the market price for 130 enterprises, adjusted losses of about 2,962 billion vnd, increased taxable income of 3,430 billion vnd and collected tax arrears of 724 billion vnd.

Through the inspection and examination, tax authorities also found that the regulations on tax administration for enterprises with related transactions have been gradually standardized, much clearer, so the foreign investment enterprises have been more aware of the declaration in accordance with the regulations. Since then, enterprises have discovered and adjusted the information of their businesses before the tax authorities come to inspect and examine.

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Moreover, the inspection and examination are also implemented by the tax authorities under the risk management mechanism to save human resources as well as creating conditions for businesses in production and business. In addition to examination and inspections, the Tax authorities have actively propagandized, supported and guided the declaration so that enterprises can comply with the new regulations better, avoiding such violations later.