Vietnam: Advance Pricing Agreements gaining importance

Advance Pricing Agreements gaining importance

The extent of economic restraints caused by COVID-19 cannot be known as of yet, and also the Vietnamese economy will
not grow as recently estimated. This will make it necessary to reduce the estimation regarding the tax revenue from normal
tax declarations. It can be assumed that this re-estimation will further increase the expectation of the Government of Vietnam,
that the Vietnamese Tax Authorities (TA) will increase the additional revenue from tax audits.

In the past, the general tax audits and TP tax audits were mostly held separately. The very recent tendency is to incorporate TP
issues in the normal tax audits, which multiplies the audits that involve TP issues. According to the plan for the 2020 tax audit,
TP audits continue to be the priority of the TA, especially in foreign-invested companies.

The regulations on the Advance Pricing Agreement (APA) are not new, but until now the practical importance was rather limited.
The APA is an agreement between the taxpayer and the TA that determines in advance the basis of tax calculation, methods of
determining taxable prices and the arm’s length prices of one or more related-party transactions in a certain period of time.

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