OBLIGATIONS OF TAXPAYERS IN DECLARATION AND DOCUMENTATION OF TRANSFER PRICING

• Taxpayers engaged in the transfer pricing shall be held responsible for declaring and determining transfer prices, and shall be exempted from taking on obligations to pay corporate income tax within the territory of Vietnam.
• Taxpayers engaged in the transfer pricing shall be held responsible for declaring information about related-party relationships and transactions and submitting it together with the corporate income tax finalization return.
• Taxpayers shall be responsible for retaining and providing the related-party transactions pricing documentation package, including Local file, Master file and Country-by-Country report.
• Transfer pricing documentation package must be prepared before the time of filing corporate income tax finalization returns each year, and must be stored and presented to meet the demand for information requested by tax authorities. When a tax authority carries out transfer pricing audit, the time limit for provision of the transfer pricing documentation package shall not exceed 15 working days from the date of receipt of request from provision of information.

AND

1. A taxpayer shall be exempted from the transfer pricing documentation requirements referred if it is engaged in a related-party transactions with an entity that must pays corporate income tax within the territory of Vietnam, is subject to the same corporate income tax rate as applied to the taxpayer, and where neither of them is not offered the corporate income tax incentive within a specified tax period, but shall be required to provide bases for such exemption.
2. The taxpayer shall be responsible for declaration of transfer pricing information but shall be exempted from the transfer pricing documentation in the following circumstances:

• • Taxpayer is engaged in the transfer pricing but the total revenue arising within a specified tax period is less than VND 50 billion and the total value of the related-party transactions arising within a specified tax period does not exceed VND 30 billion.
  • Taxpayer is already entering into An Advance Pricing Agreement (APA) has submitted the annual report in accordance with legislation on Advance Pricing Agreement. For those related party transactions which are not covered by the APA, taxpayers are obliged to comply with the aforesaid transfer pricing documentation requirements.
  • Taxpayer performing business activities by exercising routine functions, neither generating any revenue nor incurring any cost from operation or use of intangible assets, generating sales of less than VND 200 billion, as well as applying the ratio of net operating profit before loan interest and corporate income tax relative to sales revenue, engages in related-party transactions in the following sectors: Distribution: At least 5%; Manufacturing: At least 10%; Toll manufacturing: At least 15%. Where the taxpayer does not comply with the profit margins stipulated in this point, the aforesaid transfer pricing documentation shall be required.

==> If not exempted from the transfer pricing documentation, beside the related-party relationships and transactions declaration appendix submitted together with the corporate income tax finalization return, taxpayers shall be responsible for retaining and providing the related-party transactions pricing documentation package, including Local file, Master file and Country-by-Country report. Thus, need to concern to find a Transfer Pricing Documentation service vendor to finish it and avoid tax risk as well as penalty.