New transfer pricing decree: a step closer to international standards
On February 24, 2017, the Vietnamese government released the new transfer pricing Decree No. 20/2017/ND-CP ‘Providing tax administration applicable to enterprises having controlled transactions’ (Decree 20), which will take effect from May 1, 2017. Decree 20 replaces the existing TP regulations (Circular No.66/2010/TT-BTC) and provides new compliance requirements in Vietnam. While Decree 20 is loosely based on Circular 66, it extends the interpretation of existing provisions and introduces additional concepts and principles from the Organization for Economic Cooperation and Development Guidelines and Base Erosion and Profit Shifting Framework. The preamble sets out the decree’s objective of administering transfer pricing in order to prevent the loss of tax revenue to the state budget. It also introduces the concept of ‘substance over form’ to be applied by tax officials in the administration, examination, and auditing of transfer pricing. This notion forms the basis of the subsequent articles and provisions in the decree.
