Subsequent to the introduction of the Amended Law on Tax Administration which serves as a legal basis for the application of Advance Pricing Agreement (APA), the General Department of Taxation (“GDT”) currently is working on a draft Circular providing detailed guidance on APA application. Ernst & Young Vietnam is requested by the GDT to provide comments/ feedbacks on the draft for GDT’s consideration and finalization.The alert summarizes some of the salient features of the APA program, departures (if any) from other established APA programs and our comments to the GDT.
APA and scope of application
This draft Circular is in line with universal definition on APA which defines APA as an agreement between Vietnam’s tax authority and taxpayer (i.e. unilateral APA) or between Vietnam’s tax authority, taxpayer on one hand and the tax authority of countries/territories with whom Vietnam has signed double tax treaties (i.e. bilateral and multilateral APA).
The scope of application for APA in the draft guidance also aligns with the currently effective Vietnamese TP regulations when it comes to covered taxpayer and transactions. That means this draft Circular applies to organizations producing and/or trading in goods and/or providing services and having business transactions with associated parties.