Vietnam
will tighten price control of foreign-invested enterprises to avoid tax losses
and ensure fairness for local firms, said a taxation official.
The General Department of Taxation under the
Ministry of Finance has made a petition to the National Assembly (NA) on
supplementing the advance pricing agreement (APA) mechanism to prevent transfer
pricing at FDI enterprises.
Under APA, multinational taxpayers in Vietnam
must take the initiative to suggest pricing measures or the price level when
conducting trade between members of the same group before declaring taxes to
local tax agencies.
On the other hand, tax agencies will supervise
the price list of the items registered by enterprises either by themselves or
in coordination with foreign tax agencies that have signed agreements on double
taxation avoidance with Vietnam.
Cao Anh Tuan, deputy head of the General
Taxation Department told a press briefing earlier this week in Hanoi to reveal
some contents of the amended Tax Management Law that the tax authority had
increased inspection of transfer pricing with limited effectiveness.
In response to the local media’s question
about how the tax authority identified the authenticity of price declarations
of FDI enterprises given the forex rate volatility, Tuan said when FDI firms
invested in Vietnam, they made long-term business strategies which take into
account the forex rate factor.
He explained APA would not overlap the price
management draft law which is currently sparking concern among the business
community.
APA has been applied in the member nations of
the Organization for Economic Co-operation and Development (OECD) as well as
regional countries like China, Thailand, Indonesia, Malaysia and Singapore.
Under this mechanism, tax agencies and
multinational companies make commitments on prices according to market
principles.
Transfer pricing has caught more attention of
State management agencies as there are concerns that FDI enterprises will not
pay taxes and cause harm to the local business environment.
Deputy Minister of Investment and Planning
Dang Huy Dong recently said his ministry had prepared a technical assistance
project to study transfer pricing issues which he described as very
complicated.
The application of APA to tackle transfer
pricing is one of the contents of the draft on the amended Tax Management Law
to be submitted to NA this May.
NA will consider approving this draft on
October for the law to take effect in early 2014.
Tuoi Tre
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.
No comments:
Post a Comment