Circular 201/2013/TT-BTC: 03 Principles for Applying APA

According to the provisions of Circular 201/2013/TT-BTC, advance pricing agreements (APA) are applied based on the following three principles:

Source: Internet

- APA is applied based on the principle that the tax authorities and the taxpayer (the subject to whom the APA applies) or the Vietnamese tax authorities and the tax authorities of the partner signatory to the Tax Agreement and the taxpayer cooperate, exchange, and negotiate the application of legal provisions regarding the fulfillment of corporate income tax obligations for related party transactions, based on the application of the arm's length principle according to market prices.- The application of APA aims to enhance the efficiency of tax administration, reduce the cost of tax law compliance, determine market prices in related party transactions consistent with the nature of business activities generating appropriate profit levels to fulfill income tax obligations, and prevent double taxation and tax evasion, minimizing disputes over determining market prices in related party transactions. During APA negotiations, taxpayers shall declare and pay taxes according to current legal regulations.- Methods for determining market prices in related party transactions within the scope of APA application are carried out according to regulatory documents guiding the determination of market prices in business transactions between related parties. When selecting the method for determining market prices applied in APA, the nature and calculation method should be considered rather than the name of the method.

For further regulations, refer to Circular 201/2013/TT-BTC effective from February 05, 2014.

Thu Ba

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