Which is the current form for the annual application of APA in Vietnam? What are the principles of tax declaration with APA in Vietnam?
What is the current form for the annual application of APA in Vietnam?
According to Clause 1, Article 41 of Decree 126/2020/ND-CP, taxpayers who are subject to corporate income tax under the declaration method during their production and business activities with transactions arising with related parties have the right to request the application of an Advance Pricing Agreement mechanism (hereinafter referred to as APA).
Thus, APA is a mechanism for advance agreement on the method of determining taxable prices.
The form for the annual application of APA is Form No. 04/APA-BC Appendix III issued with Decree 126/2020/ND-CP.
Download the annual application of APA form
Which is the current form for the annual application of APA in Vietnam? What are the principles of tax declaration with APA in Vietnam? (Image from the Internet)
What are the principles of tax declaration with APA in Vietnam?
Based on Clause 2, Article 41 of Decree 126/2020/ND-CP, the application of an advance agreement on methods of determining taxable prices must ensure compliance with the provisions of Clause 6, Article 42 of the Law on Tax Administration 2019. The tax declaration principles for the advance agreement on methods of determining taxable prices (APA) are stipulated as follows:
- The application of the advance agreement on methods of determining taxable prices is carried out based on the taxpayer's request, the consensus between the tax authority and the taxpayer through unilateral, bilateral, and multilateral agreements between the tax authority, the taxpayer, and foreign tax authorities, relevant jurisdictions;
- The application of the advance agreement on methods of determining taxable prices must be based on the taxpayer's information, commercial databases with verified legal assurance;
- The application of the advance agreement on methods of determining taxable prices must be approved by the Minister of Finance before implementation; for bilateral and multilateral agreements involving foreign tax authorities, the implementation shall follow the legal provisions on international treaties and international agreements.
When shall APA be canceled in Vietnam?
According to Clause 10, Article 41 of Decree 126/2020/ND-CP, the cancellation of an APA is prescribed as follows:
The application of the advance agreement on methods of determining taxable prices for enterprises with related-party transactions
...
- Cancellation of APA
a) APA can be canceled in the following cases: The taxpayer or any related party involved in related-party transactions fails to comply with the terms and conditions of the APA; the taxpayer has significant errors or major faults in the APA application dossier, annual application of APA, ad-hoc report; the taxpayer does not provide complete information, documents for the annual application of APA or required information, documents, and ad-hoc reports as requested by the tax authority; the taxpayer and the tax authority cannot agree on amending the APA; the partner tax authority requests the cancellation of the APA and is approved by the Ministry of Finance; the taxpayer submits a request to cancel the APA with a reasonable rationale.
b) In case the APA is canceled, the General Department of Taxation issues a notification on the cancellation of the APA specifying the reason for cancellation and the effective date of the APA's cancellation. Taxpayers shall fulfill tax obligations arising from transactions mentioned in the canceled APA according to current regulations on tax management related to enterprises with related-party transactions for tax declaration purposes as of the effective date of the cancellation.
- Revocation of APA
a) APA can be revoked in the following cases: The taxpayer intentionally provides false information or engages in fraud in the APA application, report implementation, or during the request for APA amendment; the partner tax authority requests the revocation of the APA and is approved by the Ministry of Finance.
b) In case the APA is revoked, the General Department of Taxation issues a notification on the revocation of the APA specifying the reason for revocation and the effective date of the revocation (calculated from the first day of the APA application period). Taxpayers shall fulfill tax obligations arising from transactions mentioned in the revoked APA according to current regulations on tax management for enterprises with related-party transactions for tax declaration purposes from the effective date of revocation.
Thus, APA can be canceled under the following circumstances:
- The taxpayer or any related party involved fails to comply with the APA's terms and conditions;
- The taxpayer has significant errors or major faults in the APA application dossier, annual application of APA, ad-hoc report;
- The taxpayer does not provide complete information, documents for the annual application of APA or required information, documents, and ad-hoc reports as requested by the tax authority;
- The taxpayer and the tax authority cannot agree on amending the APA;
- The partner tax authority requests the cancellation of the APA and is approved by the Ministry of Finance;
- The taxpayer submits a request to cancel the APA with a reasonable rationale.
