What are the required contents in the final draft APA in Vietnam?

Which entity will prepare the draft advance pricing agreement (APA) in Vietnam?​

Under the provisions of Clause 5, Article 41 of Decree 126/2020/ND-CP on the application of the advance pricing agreement (hereinafter referred to as APA) to enterprises having related-party transactions

Application of advance pricing agreement to enterprises having related-party transactions

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5. On the basis of the negotiation result, General Department of Taxation shall draft the APA and submit it to the Ministry of Finance for approval.

For bilateral and multilateral APAs participated in by foreign tax authorities, the Ministry of Finance shall consult with the Ministry of Foreign Affairs, the Ministry of Justice, relevant authorities, the Government and the Prime Minister about conclusion of the APA in accordance with regulations of law on conclusion of international agreements.

Thus, the General Department of Taxation in Vietnam will prepare the draft advance pricing agreement based on the negotiation results with the taxpayer (in the case of a unilateral APA) or with partner tax authorities and the taxpayer (in the case of bilateral or multilateral APA) about the content of the APA.

What are the required contents in the final draft APA in Vietnam?

According to the provisions of Clause 6, Article 41 of Decree 126/2020/ND-CP, the final draft APA shall contain the following information:

- Names and addresses of the related parties that participate in the APA;

- Description of the related-party transactions regulated by the APA;

- The method for comparing and determining values of related-party transactions as the basis for tax calculation; method for determination and calculation of prices, rate of return advertisement the basis for determination of taxable values relevant to the related-party transactions to which APA is applied (including standard independent transaction value if appropriate);

- Important presumptions that may have material considerable impacts on the implementation of the APA (including analyses and forecasts);

- Regulations on responsibilities and obligations of taxpayers;

- Regulations on responsibilities and obligations of tax authorities;

- Effect;

- Other regulations that are conformable with regulations of law on fulfillment of tax obligations relevant to the APA;

- Appendices (if any).

What are the required contents in the final draft APA in Vietnam? (Image from the Internet)

What are the cases of APA cancellation in Vietnam?

According to the provisions of Clause 10, Article 41 of Decree 126/2020/ND-CP on the cancellation of the APA:

Application of advance pricing agreement to enterprises having related-party transactions

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10. APA cancellation

a) The APA may be cancelled in the following cases: the taxpayer or any of the related parties fails to comply with the terms and conditions of the APA; there is a material error in the APA application, annual or ad hoc APA report; the taxpayer fails to provide adequate information and documents in the annual or ad hoc APA reports as requested by the tax authority; the taxpayer and tax authority fails to reach a consensus on revisions to the APA; cancellation of the APA is requested by the other party's tax authority and accepted by the Ministry of Finance; the taxpayer submits a request for cancellation of the APA and provides reasonable explanation.

b) In case the APA is cancelled, General Department of Taxation shall issue a notice of APA cancellation. The notice shall specify the reasons for cancellation and cancellation date. The taxpayer shall fulfill tax obligations mentioned in the cancelled APA in accordance with applicable regulations on tax administration of enterprises having related-party transactions from the cancellation date.

Thus, the cases of APA cancellation in Vietnam include:

- the taxpayer or any of the related parties fails to comply with the terms and conditions of the APA;

- there is a material error in the APA application, annual or ad hoc APA report;

- the taxpayer fails to provide adequate information and documents in the annual or ad hoc APA reports as requested by the tax authority;

- the taxpayer and tax authority fails to reach a consensus on revisions to the APA;

- cancellation of the APA is requested by the other party's tax authority and accepted by the Ministry of Finance;

- the taxpayer submits a request for cancellation of the APA and provides reasonable explanation.