e National Assembly on 19 June 2017 approved the Law on Technology Transfer No. 07/2017 / QH14 (“LTT 2017”). The new law (LTT 2017) comes into force on 1 July 2018 and replaces the Law on Technology Transfer No. 80/2006 / QH11 of 29 November 2006. New processes relating to technology transfer have the following tax and transfer pricing effects in Vietnam:
Tax incentives: According to the new law (LTT 2017) tax incentives are introduced for the following items:
- Machines, equipment, spare parts, materials, samples and technologies not yet created in the country and imported for direct use in research and development, decoding, technological innovation and transfer; scientific documents and books for creative start-ups, development of science and technology enterprises;
- Technological incubators, science and technology enterprises incubators, organisations and individuals that invest in and support creative start-ups; intermediaries of the science and technology market which earn income from the provision of technology transfer services;
- Organisations and individuals transferring technology from Vietnam to foreign countries; organisations and individuals engaged in scientific research and technological development, technology transfer and technology decoding at enterprises; and
- Organisations and individuals transferring technologies that are encouraged to be transferred.
Enterprises should pay attention to the above items if a technology transfer is carried out.
Tax audits: The tax authorities in Vietnam generally require that taxpayers offer technology transfer contract registration dossiers for the assessment of claims for the deductibility of technology transfer fees. The 2006 Act did not require the registration of transfer contracts. However, with the new Law on Technology Transfer, the tax authorities will have stronger legal grounds to exclude the costs of the technology transfer from deductible expenses if the technology transfer contract is not registered.
The 2017 law also specifies that the technology transfer price in the following instances must be audited and implemented in accordance with the tax and price law:
- Technological transfer between parties, if one or more parties have received capital from a national institution;
- technology transfer between related parties within a holding company; and
- Technology transfer between related parties according to tax laws.
According to the new regulation, the tax authorities may request the enterprises receiving the technology to provide the audited technology transfer dossiers and the dossiers on the determination of market prices for the transferred technologies in order to determine the expenses deductible for CIT calculation purposes.