Anti-transfer pricing: Harmonize anti- revenue loss target with investment attraction

VCN - Among recommendations sent to the Ministry of Finance, most voters nationwide have paid attention to inspection, examination and anti-State revenue loss and proposed to issue efficient solutions.
Replacement of Decree 20/2017/ND-CP comprehensively removes difficulties inanti-transfer pricing Replacement of Decree 20/2017/ND-CP comprehensively removes difficulties inanti-transfer pricing
Regulations on anti-transfer pricing to be revised Regulations on anti-transfer pricing to be revised
Efforts against revenue loss and transfer pricing Efforts against revenue loss and transfer pricing
2415-3246-7-3357nik1812-3
Currently, the annual tax inspection and examination plan of the tax agency is done according to the method of risk management. Photo: Thuy Linh


Anti-transfer pricing enhanced

Responding to voters’ proposals on clarifying the effectiveness of the inspection and examination of transfer prices, the Ministry of Finance confirmed that this task achieved remarkable results.

In 2018, the tax sector inspected and examined 758 enterprises with affiliated transactions;recorded tax arrears, tax refunds and fines of more than VND1,908 billion; reduced losses by more than VND8,558 billion; reduced tax abatement of VND51.88 billion and revised up taxable income of more than VND10,838 billion.

In 2019, the tax sector inspected and examined 818 enterprises with associated transactions; recorded tax arrears, tax refunds and fines of more than VND2,547 billion; reduced losses of more than VND7,818 billion and reduced a tax abatement of more than VND106.34 billion and revised uptaxable income of more than VND7,599 billion.

According to the Ministry of Finance, in the first nine months of 2020, the revenue management agencies strengthened tax inspection, examination and budget collection, thereby detecting and promptly handling violations.

In which, the tax agency conducted about 48,980 inspections at enterprises’ offices and inspected about 436,100 tax declaration dossiers of enterprises and proposed to contributed revenue to the State budget and reduced a loss of nearly VND39.68 trillion, of which VND13.27 trillion VND was contributed to the State budget (the collected amount was VND6,664 billion); and VND20.29 trillion of outstanding tax debts from the previous year was collected.

Strengthening the inspection and examination of associated transactions has created a strong effect and the number of foreign-invested enterprises declaring losses has decreased significantly.

To improve the mechanism and policy on transfer pricing management, the Ministry of Finance has submitted to the Government to submit to the National Assembly for promulgation of the Law on Tax Administration No. 38/2019 / QH14, effective from July 1, 2020. Accordingly, the Ministry of Finance completed and submitted to the Government for promulgation a Decree on tax administration for enterprises with associated transactions to replace Decree No. 20/2017 / ND-CP.

In the near future,according to the aforementioned legal documents, the Ministry of Finance will continue to promote inspection and examination of transfer pricing, focusing on groups with many member enterprises; industries with significant tax risks due to the transfer pricing behavior of associates and enterprises that have been restructuring and are at risk of taking advantage of transfer pricing for tax avoidance.

In addition, the Ministry will also focus on inspecting and examining enterprises with large proportions of associated transactions; enterprises trading with countries that have low corporate income tax rates and do not collect corporate income tax and enterprises that have big debts with foreign associates

Risk-based inspection

Voters in some provinces propose to the Government to inspect, examine and handle enterprises that violate regulations on anti-transfer pricing in production and business activities.

According to the Ministry of Finance, in the trend of integration and modernization of the global economy, with differences in tax rates and tax incentives among countries, the problem of transfer pricing and tax avoidance does not just happen in Vietnam but also in many countries around the world, including developed countries.

Multinational corporations and domestic private economic groups have increasingly complex and more sophisticated activities and take measures to arrange transactions to transfer prices and avoid taxes, transfer profits and maximize their interests. These are common difficulties and challenges for tax agencies in all countries, including Vietnam.

The problem posed in tax administration is to ensure the implementation of the target of anti-tax loss; prevent transfer pricing for tax avoidance;prevent transfer - profit, protect tax bases as well as the right to tax assessment while attracting foreign investment capital, ensuring competitiveness and fairness between domestic and foreign enterprises.

To solve this problem, the Ministry of Finance has synchronously carried out measures for tax administration, anti-revenue loss, anti-transfer pricing, anti-transfer profit and erosion of revenue sources in terms of institutions and policies; provide information and support to taxpayers; declaration management; training to improve the quality of human resources; inspecting and examining transfer prices; communication and international cooperation on tax.

The Ministry of Finance has stepped up the inspection of enterprises with associated transactions in order to monitor and prevent violations; ensure fairness in compliance with tax policies; improve deterrence and law enforcement for those who do not comply or do not comply well with the rules.

In addition, the annual inspection plan is selected on the basis of risk analysis and focusing on associates with unprofitable business results, enterprises with high proportion of associated transactions; and enterprises trading with countries that have low corporate income tax rates or do not collect corporate income tax.

By Hong Van/ Huyen Trang

Related News

Electronics industry overcomes challenges to penetrate deep into global supply chain

Electronics industry overcomes challenges to penetrate deep into global supply chain

VCN - In addition to the opportunities from the investment shift in the electronics industry, Vietnamese enterprises also face many challenges in terms of capital, technology and human resources. Ms. Do Thi Thuy Huong, Executive Committee Member of the Vietnam Electronics Industry Association (VEIA), shared about the future directions for this potential industry.
Deputy Prime Minister, Minister of Finance: Budget management to be more decentralized

Deputy Prime Minister, Minister of Finance: Budget management to be more decentralized

VCN - Deputy Prime Minister, Minister of Finance Ho Duc Phoc indicated that the revision of the State Budget Law (SBL), as part of the "One Law Amending Seven Laws" scheme, focuses on removing short-term bottlenecks and obstacles. He also announced that future amendments will increase decentralization and delegation of authority in budget management.
Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
"One law amending four laws" on investment to decentralize and ease business challenges

"One law amending four laws" on investment to decentralize and ease business challenges

VCN - According to the Government, the draft Law amending and supplementing certain provisions of the Planning Law, Investment Law, Law on Investment under Public-Private Partnerships (PPP), and Bidding Law (referred to as "One law amending four laws") focuses on amending conflicting regulations that are causing obstacles, to facilitate investment, production, and business activities.

Latest News

Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN – In order to achieve goal of strictly managing public debt and maintaining security and safety of the national financial system in 2025, it is necessary to ensure the borrowings and repayments of public debts is within the approved estimate; closely monitor public debt indicators to ensure that they are within the ceiling and warning thresholds approved by the National Assembly.
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

VCN - On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws. Concluding the session, Vice Chairman of the National Assembly Nguyen Duc Hai emphasized the need for the Government to direct the drafting body and relevant agencies to collaborate closely to finalize a persuasive and widely supported report, ensuring the quality of the draft law for the National Assembly's consideration and decision.

More News

Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

VCN - According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
State-owned securities company trails competitors

State-owned securities company trails competitors

Contrary to the outstanding performances in the banking sector, the securities subsidiaries of major banks have yet to fully leverage their potential, despite numerous inherent advantages.
Strengthening the financial “health” of state-owned enterprises

Strengthening the financial “health” of state-owned enterprises

VCN - The state economy plays a key role in the socio-economic development process, but it is necessary to strengthen the financial health and competitiveness of state-owned enterprises (SOEs).
U.S. Treasury continues to affirm Vietnam does not manipulate currency

U.S. Treasury continues to affirm Vietnam does not manipulate currency

VCN - In its latest report, the U.S. Department of the Treasury has positively assessed Vietnam's monetary policy, reaffirming that Vietnam does not engage in currency manipulation.
Exchange rate fluctuations bring huge profits to many banks

Exchange rate fluctuations bring huge profits to many banks

Net profits from the foreign exchange trading segment of many banks have gained positive results thanks to a strong USD/VNĐ exchange rate fluctuations this year.
A “picture” of bank profits in the first nine months of 2024

A “picture” of bank profits in the first nine months of 2024

VCN - Pre-tax profits for banks during the first nine months of 2024 remained positive, exceeding 200 trillion VND, solidifying the sector's position as a market leader.
Many challenges in restructuring public finance

Many challenges in restructuring public finance

VCN - Restructuring public finance is an important step to improve state financial management, ensure resources are allocated reasonably and effectively, contributing to the country's sustainable development. In addition to the achieved results, the process of accelerating public finance restructuring also faces many pressures.
Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

VCN - E-commerce platforms that declare and pay taxes on behalf of traders not only help to reduce the number of tax declaration points but also reduce the cost of compliance with administrative procedures for the whole society because only one point as the e-commerce trading platform implements tax deduction, payment and declaration on behalf of tens, hundreds of thousands of individuals and business households on the platform.
Disbursement of public investment must be accelerated: Deputy PM

Disbursement of public investment must be accelerated: Deputy PM

Deputy Prime Minister Ho Duc Phoc has called on ministries, agencies, and localities to accelerate the disbursement of public investment from now until the year-end and further tighten investment management.
Read More

Your care

Latest Most read
Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN - According to the plan for borrowing and repaying public debt and foreign debt of the country in 2025, the total borrowing demand of the Government in the year is expected to be at VND 815,238 billion, an increase of 20.6% compared to the Government'
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws.
Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
Mobile Version