Hanoi, Vietnam

Best Practice for Transfer Pricing in Vietnam for Global MNCs

By David Lang and Thanh Nguyen, Viettonkin Consulting

Besides the positive contributions of foreign enterprises to Vietnam’s economy, this field has also exposed some concerns, which adversely impacted Vietnam’s investment environment. In order to avoid illegal activities such as tax evasion, some of the best practices for transfer pricing in Vietnam are as follows:

1. FDI enterprises implemented transfer pricing by selling goods and raw materials to associates at a much lower price than the selling price to non-associates. Thanks to the advantage of holding a large share of capital in Vietnamese enterprises, the foreign associates have the right to determine the transfer price of goods and raw materials to transfer a lot of pre-tax profits to the host country.

2. FDI enterprises carry out the transfer pricing by choosing countries and territories in the world with low corporate income tax rates as the headquarters to register their investment in Vietnam. These enterprises take advantage of tax rate differences between countries and regions to evade taxes. As corporate income tax in countries where investors registered to invest in Vietnam is zero or at a deficient level, enterprises must not pay taxes or low numbers.

3. For investors who intend to transfer prices, they actively increased input prices (machinery, equipment, technology, etc.) in the project’s economical-technical feasibility study to create significant corporate fixed assets value. If any demand for supplements or replacement during the later production and business process, the prices of new machinery and equipment will be declared as the price costs, creating virtual values in terms of capital. Hence, the depreciation rate is increased, the price cost is also higher, low, or even no profit, and the company will lose.


David Lang

David Lang

GGI member firm
Viettonkin Consulting
Auditing and Accounting, Tax, Law Firm Services, Advisory
Hanoi, Vietnam
T: +84 94 5086038
E: This email address is being protected from spambots. You need JavaScript enabled to view it.
W: viettonkinconsulting.com

Founded in 2009, Viettonkin is a multidisciplinary group of consulting firms specialising in accounting, legal, and a one-stop solution to FDI enterprises worldwide. The FDI consulting company aims to facilitate and connect investors in Southeast Asia with the rest of the world.

David Lang is the Founder and CEO of Viettonkin. He has over 10 years of experience, focused on FDI investment and supporting worldwide enterprises.
Thanh Nguyen

Thanh Nguyen

GGI member firm
Viettonkin Consulting
Auditing and Accounting, Tax, Law Firm Services, Advisory
Hanoi, Vietnam
T: +84 94 5086038
E: This email address is being protected from spambots. You need JavaScript enabled to view it.
W: viettonkinconsulting.com

Thanh Nguyen is an Accounting Manager at Viettonkin with considerable expertise in accounting and statutory audit.


Published: Auditing, Reporting & Compliance Newsletter, No. 05, Spring 2021 l Photo: Hanoi Photography - stock.adobe.com

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