Vietnam vows to continue fight against transfer pricing

The Ministry of Finance (MOF) has opened a draft decree on the management of transfer prices in related transactions and anti-transfer pricing. 

Vietnam vows to continue fight against transfer pricing

If the draft decree is approved by the Prime Minister, Vietnam will have for the first time a legal document on anti-transfer pricing at the decree level.

The story about transfer pricing was first mentioned in 2012 when local newspapers quoted tax officials as saying that they ‘found signs of foreign invested conglomerates conducting transfer pricing’.

Vietnam has been fighting against transfer pricing since then. However, initial results remain modest. 

Coca-Cola, PepsiCo, Metro and Big C are targets of taxation bodies’ investigations against transfer pricing. However, official conclusions about whether the multi-national conglomerates conduct transfer pricing have never been made.

The problem lies in the lack of a legal framework to fight against transfer pricing. To date, Circular No 66/2010 and Circular 201/2013 are the two documents at the highest level levels covering the issue. 

To date, Circular No 66/2010 and Circular 201/2013 are the two documents at the highest level levels covering the issue. 


Taxation bodies have acknowledged that it is difficult to find evidence of transfer pricing because of sophisticated conduct by multinational groups and the lack of a legal framework in Vietnam.

Lawyer Truong Thanh Duc from Basico Law Firm agreed that anti-transfer pricing operations and a legal framework for operations still cannot satisfy requirements. 

“Only laws are legally sufficient, while decrees and circulars are just documents that explain the provisions of the laws,” he said.

Since the provisions on anti-transfer pricing are not found in the laws, it is difficult to deal with the transfer pricing, even if the cases are brought to the court.

Duc said Vietnam is a ‘paradise for transfer pricing activities’.

MOF in 2012 set up a transfer pricing management team under the General Department of Taxation (GDT). In 2015, it established four transfer pricing inspection divisions belonging to four taxation agencies in Hanoi, HCMC, Dong Nai and Binh Duong, where there are many joint ventures and foreign invested enterprises.

In 2015, tax officials, after conducting inspection tours of 420 enterprises which had related transactions, released decisions on collecting VND4.8 trillion in tax arrears and punishment for violating tax payment regulations. 

After the inspections, the enterprises’ losses decreased by VND3.1 trillion, while their taxable income increased by VND801 billion.

In 2014, taxation bodies, which inspected five enterprises, collected VND300 billion in tax arrears. 

According to the chair of VAFIE Nguyen Mai, in many countries, taxation bodies and enterprises negotiate about tax sums that enterprises have to pay. Vietnam has been advised to apply the method.

Chi Mai

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