The second stage peer review report on the implementation of the Action 14 minimum standard (making dispute resolution more effective) in Vietnam was published by the OECD’s Inclusive Framework on 13 September 2022.

The report notes that Vietnam has an extensive tax treaty network consisting of more than 78 tax treaties and has a small inventory of mutual agreement procedure (MAP) cases, with a small number of new cases submitted each year. The report notes that Vietnam meets less than half of the elements of the Action 14 minimum standard but has been working to address the remaining issues, some of which have been resolved.

The report notes that all Vietnam’s tax treaties contain a provision relating to the MAP, and generally the MAP articles are in line with paragraphs 1 to 3 of Article 25 of the OECD Model Tax Convention.

Vietnam’s treaty network is mainly in line with the requirements of the Action 14 minimum standard, but around 17% of the tax treaties do not contain the equivalent of the first sentence of Article 25(3) of the OECD Model, requiring the competent authority to endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the tax treaty. Around 15% of the treaties do not include a provision for mutual agreements to be implemented regardless of any time limits in domestic law; or the alternative provisions for Article 9(1) and Article 7(2) to set a time limit for transfer pricing adjustments. Also, around 10% of the treaties do not contain a provision equivalent to the second sentence of Article 25 (3) of the OECD Model allowing the competent authorities to consult together to eliminate double taxation in cases not provided for in the treaty.

Vietnam has signed the multilateral instrument (MLI) to implement treaty-based provisions arising from the OECD project on base erosion and profit shifting (BEPS); and intends to ratify the instrument during 2022. The MLI can be used to update some of the treaties to bring them in line with the minimum standard. In the case of treaties that cannot be modified using the MLI, Vietnam intends to update the treaties through bilateral negotiations, although a plan to do this has not yet been put in place.

The peer review report considers that Vietnam does not meet the minimum standard with regard to the prevention of disputes. An advance pricing agreement (APA) program is in place, but it does not include a provision for rolling back APAs to previous periods.

The report notes that Vietnam provides access to the MAP in all eligible cases, although since 1 January 2017 it has not received any MAP request concerning cases where anti-abuse provisions are applied or cases where there has been an audit settlement. There is clear and comprehensive guidance on the availability of the MAP and its practical application; however, Vietnam has not put in place any documented bilateral consultation process for situations where the competent authority considers that the issue raised by taxpayers in a MAP request is not justified.

In the years from 2017 to 2020 Vietnam completed MAP cases within an average time of 17.77 months, which is within the time period of 24 months required by the minimum standard. Input from other countries indicated that they have experienced difficulty in obtaining position papers from Vietnam’s competent authority and in receiving responses to their own position papers. The report therefore recommends that adequate resources should be made available to Vietnam’s competent authority to enable it to resolve MAP cases in an efficient and timely manner.

The report notes that Vietnam meets some of the requirements of the minimum standard in relation to the resolution of MAP cases. The organisation is adequate and appropriate performance indicators are used for performing the MAP function. However, Vietnam did not correctly match its MAP statistics according to the Statistics Reporting Framework in the years under review.

In principle Vietnam meets the minimum standard in relation to the implementation of MAP agreements, although no MAP agreements requiring implementation have been entered into. The report notes that Vietnam has a domestic statute of limitation that could prevent MAP agreements being implemented where the relevant tax treaty does not contain the equivalent of the second sentence of Article 25(2) of the OECD Model.