What is the form of advance pricing agreement in Vietnam?

Which entities are subject to the tax authority's application of advance pricing agreements in Vietnam?

Under Article 19 of the Law on Tax Administration 2019:

Powers of tax authorities

Tax authorities have the right to:

1. Request taxpayers to provide information and/or materials related to the determination of tax liabilities, including information on investment value; transaction IDs and contents of accounts opened at commercial banks and/or other credit institutions and explaining tax calculation, tax declaration and/or tax payment.

2. Request relevant organizations and/or individuals to provide information and/or materials related to the determination of tax liabilities and cooperate with tax authorities in implementing provisions on taxation.

3. Conduct tax audits/inspections as prescribed by law.

4. Impose fixed tax.

5. Enforce tax decision.

6. Impose penalties for administrative violations of tax administration as authorized; publish tax-related regulatory violations on mass media.

7. Implement preventive measures and ensuring that actions are taken against tax-related administrative violations.

8. Delegate collection of some taxes to agencies, organizations and/or individuals in accordance with the Government’s provisions.

9. Apply advance pricing agreement to taxpayers and tax authorities of foreign countries and territories with whom Vietnam signed and acceded to agreements on prevention of double taxation and tax evasion for income tax.

10. Purchase information, materials and data from domestic and foreign providers to serve tax administration; pay for delegation of tax collection from collected tax or from budget of tax authorities as prescribed in the Government’s provisions.

The tax authority applies the advance pricing agreement to taxpayers and tax authorities of foreign countries and territories with whom Vietnam signed and acceded to agreements on the prevention of double taxation and tax evasion for income tax.

What is the form of advance pricing agreement in Vietnam? (Image from the internet)

What is the form of advance pricing agreement in Vietnam?

Under Clause 16, Article 3 of the Law on Tax Administration 2019:

Definitions

In this Law, the following terms are understood as follows:

...

16. “advance pricing agreement” means a documented agreement between tax authorities and taxpayers or between tax authorities, taxpayers and tax authorities of foreign countries and territories with whom Vietnam signed and acceded to agreements on prevention of double taxation and tax evasion for income tax within a time limit. Taxing bases, methods of pricing or pricing based on market rate are specified in this agreement. Advance pricing agreement is established before taxpayers file their taxes.

...

An advance pricing agreement is a documented agreement between:

- tax authorities and taxpayers, or

- tax authorities, taxpayers and tax authorities of foreign countries and territories with whom Vietnam signed and acceded to agreements on prevention of double taxation and tax evasion for income tax within a time limit.

Taxing bases, methods of pricing or pricing based on market rate are specified in this agreement. Advance pricing agreement is established before taxpayers file their taxes.

What are the the rules for declaring tax with predetermined taxable price calculation method in Vietnam?

Pursuant to Clause 6, Article 42 of the Law on Tax Administration 2019, the rules for declaring tax with predetermined taxable price calculation method are:

- Predetermined taxable price calculation methods shall be applied on the basis of request of the taxpayers, consensus between the tax authorities and the taxpayer under unilateral, bilateral and multilateral agreements between tax authorities, taxpayers and tax authorities of relevant countries or territories;

- Predetermined taxable price calculation methods shall be applied according to information provided by the taxpayers and legally verified commercial database;

- Application of predetermined taxable price calculation methods is subject to approval by the Minister of Finance. Regulations of law on international treaties and international agreements shall apply to bilateral and multilateral agreements participated in by foreign tax authorities.