Vietnam is currently piloting an advance pricing agreement (APA) todeal with the popular tax-ruse of transfer pricing, a representativefrom the Ministry of Finance (MoF) confirmed.
Transferpricing -- the trick of misrepresenting tax bands to avoid paying extra-- poses a serious headache for tax collectors, so the APA is intendedto prevent future transfer pricing disputes by entering parties into afive-year fixed agreement on their tax band.
Taxpayers mayenter into APAs with more than one tax authority – i.e, bilateral ormultilateral APAs – through the mutual agreement procedure (MAP)included in most income tax treaties. Unilateral APAs involve agreementsbetween the taxpayer and one government.
Pilot participantsinclude Samsung and other FDI companies, under which, these companieswill declare their costs, prices and projected profits in Vietnamfor the next three years.
The MoF also released adrift circular advising on the application of the APA in tax administration.
In another move to avoid tax fraud, the amended Tax Law regulates thatthough frauds can be punished up to five years from the date of theviolation, offending tax payers must now pay the full amount owed iftheir frauds were committed in the past 10 years.
Accordingly, tax authorities can inspect any suspected cases from thepast 10 years. If they find any frauds, they can collect the amount oftax owed.-VNA
Transferpricing -- the trick of misrepresenting tax bands to avoid paying extra-- poses a serious headache for tax collectors, so the APA is intendedto prevent future transfer pricing disputes by entering parties into afive-year fixed agreement on their tax band.
Taxpayers mayenter into APAs with more than one tax authority – i.e, bilateral ormultilateral APAs – through the mutual agreement procedure (MAP)included in most income tax treaties. Unilateral APAs involve agreementsbetween the taxpayer and one government.
Pilot participantsinclude Samsung and other FDI companies, under which, these companieswill declare their costs, prices and projected profits in Vietnamfor the next three years.
The MoF also released adrift circular advising on the application of the APA in tax administration.
In another move to avoid tax fraud, the amended Tax Law regulates thatthough frauds can be punished up to five years from the date of theviolation, offending tax payers must now pay the full amount owed iftheir frauds were committed in the past 10 years.
Accordingly, tax authorities can inspect any suspected cases from thepast 10 years. If they find any frauds, they can collect the amount oftax owed.-VNA
