Vietnam: New transfer pricing regulations were released on 5 November 2020 and apply for financial year 2020 and going-forward.
Transfer pricing benchmarking
There have been some interesting changes directly related to transfer pricing benchmarking:
- Commercial databases are now explicitly referred to as a valid source of comparables for both taxpayers and tax authorities.
- “Secret comparables” which may be available to the tax authorities should have limited use, except when assessing an adjustment where a taxpayer has not met the transfer pricing compliance requirements.
- The arm’s length range is amended to span the 35th to the 75th percentile.
Transfer pricing documentation
Companies will now be exempt from having to comply with the three-tiered transfer pricing documentation requirement (i.e., country-by-country reporting (where relevant), master file and local file) where:
- They have only domestic related party transactions; and
- Their related parties have the same tax rate; and
- None of the parties enjoy tax incentives.
Some changes have also been introduced with respect to country-by-country reporting – contact us if this is relevant to your organisation to discuss further.