Following the introduction of Advance Pricing Agreements (APA) in the Revised Law on Tax Administration, Vietnam’s Ministry of Finance (MoF) issued Circular No. 201/2013/TT-BTC (Circular 201) providing detailed guidance on the APA application process, which will take effect as of 5 February 2014.
The substantial part of the Circular remains unchanged compared to the latest draft version released in August 2013. The changes in Circular 201 are the deletion of the application fee clause and reduction of the General Department of Taxation (GDT) timeline for evaluation of an APA application dossier from six months to three months.
The guidance on APAs and standardized processes and procedures for APA application included in Circular 201 are largely in line with the OECD’s APA guidelines and effective APA regimes in other taxing jurisdictions.
According to the Circular, an APA is a binding agreement between the taxpayer and tax authority that determines in advance the basis of tax calculation, transfer pricing (TP) methods and arm’s length prices of the covered related party transactions for a specific period of time.
An APA will be available to corporate taxpayers who undertake domestic and/or overseas related party transactions. Applications for unilateral/bilateral/multilateral APAs will all be possible.
The effective period of an APA will be five years with a renewal of a maximum of five years.
