What are regulations on databases used for declaration, determination and management of transfer prices in related-party transactions in Vietnam?

What are regulations on databases used for declaration, determination and management of transfer prices in related-party transactions in Vietnam?

Pursuant to Article 17 of the Decree 132/2020/NĐ-CP stipulating databases used for declaration, determination and management of transfer prices in related-party transactions in Vietnam as follows: 

1. Databases used for declaration, determination and management of transfer prices, including:

a) Commercial database contains financial and economic information and data that data businesses acquire, collect, standardize, archive, update and provide via their access support software, manage using tools and applications which are readily programmed, provide utilities supporting users in searching, accessing and using financial and economic data of foreign and domestic enterprises operating in Vietnam, and arranged according to business industries and sectors, geographical regions or search criteria meeting other demands to serve the purposes of comparison and determination of comparables in the process of declaration and management of transfer prices;

b) Corporate information or data publicly released on stock exchanges;

c) Information or data available on domestic and international commodity or service exchanges;

d) Information made available to the public by ministries or sectoral administrations, or other official sources.

2. Transfer price management databases of tax authorities, including:

a) The database referred to in clause 1 of this Article;

b) Information or data exchanged with counterparty tax authorities as provided in clause 7 of Article 4 herein;

c) Information made available to tax authorities by ministries or sectoral administrations;

d) Risk management databases of tax authorities.

3. Analysis and selection of independent comparables for analysis and determination of the arm's length range shall be subject to the principles of comparability analysis and the transfer pricing methods referred to herein, and must conform to the priority order in selecting comparison data as listed hereunder:

a) Internal comparables of taxpayers;

b) Resident comparables residing within taxpayers’ countries or territories;

c) Comparables from other regional states where sectoral conditions and economic growth levels are comparable.

With regard to foreign comparables operating in different geographical markets, it shall be necessary to analyze the comparability, quantitative and qualitative material differences referred to in Article 9 and 10 herein.

What are rights of taxpayers regarding the declaration and determination of transfer prices in related-party transactions in Vietnam?

Pursuant to Clause 1, 2, 3 and 4, Article 18 of this Decree stipulating rights of taxpayers regarding the declaration and determination of transfer prices in related-party transactions in Vietnam as follows: 

1. Taxpayers engaged in related party transactions as covered by this Decree shall enjoy the rights stipulated in the Law on Tax Administration No. 38/2019/QH14 dated June 13, 2019.

2. Taxpayers engaged in related party transactions under this Decree shall be held responsible for declaring and determining transfer prices, and shall be exempted from corporate income tax obligations within the territory of Vietnam in accordance with this Decree.

Taxpayers shall assume responsibility for demonstrating their compliance with this Decree with respect to their comparability analysis and selection of pricing methods upon the request of regulatory authorities.

3. Taxpayers engaged in related party transactions under this Decree shall be held responsible for declaring information about their interrelationships or intra-group relationships and related party transactions by using the Form No. 01 given in Appendix I, II and III to this Decree, and submitting their completed forms together with the corporate income tax finalization returns.

4. Taxpayers shall be responsible for retaining and providing the transfer pricing files comprising information, documents, data and records, including:

a) Interrelationship and related party transaction information provided in the form given in Appendix I hereto;

b) Local files, including information about transfer pricing, transfer pricing policies and methods, prepared and deposited at taxpayers’ offices according to the directory of information and documents prescribed in Appendix II hereto;

c) Master files containing information about business activities of multinational groups, transfer pricing policies and methods of global groups and policies on allocation of income and decentralization of operations and functions in value chains of groups according to the directory of information and documents prescribed in Appendix III hereto;

d) Country-by-Country reports of profits of ultimate parent companies prescribed in clause 5 of this Article and Appendix IV hereto.

Best regards!