Vietnam Transfer Pricing
The Vietnamese tax authorities have the most expansive view of related-party ownership compared with other countries in Asia, including twenty percent shareholding and dominating the other party by controlling its output or by controlling its supplies.
The taxpayer must apply the “most appropriate” transfer pricing method. The taxpayer must make use of comparables data and benchmarking
The Vietnamese tax authorities have wide power to challege taxpayers, including documentation, underpayment, tax evasion, and fraud. The Vietnamese tax authorities impose strong penalties on taxpayers for failure to comply with their tax regime. The penalty can amount to one to three times the amount of the tax liability adjustment if the government ascertains that the taxpayer’s tax practice is abusive.
Vietnam provides strict deductions for expenses, provides revenue / expense matching, caps deductions for interest and for marketing expenses, and reject deductions for intercompany services fees. Taxpayers are most vulnerable to tax audits when their tax holiday ends. Hot button issues include permanent establishment issues and using offshore jurisdictions to reduce taxation.