News Share

The Tax Hub

Daily Tax Newsletter

Vietnam

Responsive image

Transfer pricing regulations amended

The Ministry of Finance has issued Circular 66/2010/TT-BTC, which amends the current transfer pricing regulation Circular 117/2005/TT-BTC. Circular 66 will take effect on 6 June 2010.
Scope

Circular 66 limits the application to transactions between enterprises and their affiliated parties and, unlike Circular 117, does not cover individuals.

Related parties

Under Circular 66, the definition of "related parties" includes limited liability companies.

Under Circular 117, there was a test of affiliation whereby a 20% ownership of "total assets" in another company will render the parties as being related. Circular 66 has replaced this test with these criteria in determining related party relationships, i.e. 2 companies are related if:

-   one provides the other with a guarantee or grants a loan which constitutes at least 20% of the owner's equity of the guaranteed party / borrower, and that loan accounts for more than 50% of the total value of long and medium term loans of the guaranteed party / borrower; or
-   they both hold, either directly or indirectly, at least 20% of the owner's equity of a third party.

Material difference

Under Circular 66, any factor that triggers at least a 1% increase/decrease in the unit price of transacted products, or 0.5% increase/decrease on the gross profit ratio or profitability ratio, is considered as a "material difference", for which appropriate adjustments in the financial information of the comparable transactions should be made.

Comparative analysis

Circular 66 emphasizes that, for aggregated transactions:

-   the sale price is the highest price; and
-   the purchase price is the lowest price.

Arm's length price

Circular 66 provides guidance on how to determine arm's length prices in unique sale and purchase transactions. An adjustment of the transfer price shall be made as follows:

-   Sales transaction: if the price, gross profit ratio or profitability ratio is lower than the median of the inter-quartile range, the arm's length value is a value equal to or higher than the median of the range. This aims to ensure that the Vietnamese seller charges the highest possible price within the arm's length range with respect to cross-border controlled transactions.
-   Purchase transactions: if the price is higher than the median of the inter-quartile range, the arm's length value is a value equal to or lower than the median of the range. This limits the purchase price that the Vietnamese purchaser can purchase goods or services to a value equal to or lower than the median of the arm's length range with respect to cross-border controlled transactions.

Powerful Tax Tools

NEW

FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.

NEW

Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.

NEW

Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.

NEW

Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.

NEW

Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.

NEW

OECD BEPS Project

Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.

NEW

Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.

NEW

Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

NEW

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

NEW

Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.

NEW

Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.

NEW

Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.

NEW

VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.

NEW

NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.

NEW

Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.

NEW

Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More