New annual TP disclosure (Form-03) in relation to the existing contemporaneous documentationThe
Ministry of Finance released the revised annual TP Disclosure Form
03-7/TNDN (replacing Form 01) to be applicable from the tax year 2014
onwards.

As a practical matter taxpayers will now absolutely be
required to perform an annual benchmarking study. This is so that actual
transfer prices used during the year can be compared to the outcome of
benchmarking. Any difference must be disclosed. Failure to do such a
study will clearly result in much increased exposure to TP adjustments
and draconian penalties.

Again, as a practical matter, the
benchmarking study should be available before completion of the annual
corporate income tax return. This is so that the relevant differences
can be identified and disclosed as required by Form-03.

Increasing TP specific audits

The
new Form-03 has been released in the context of the release also of
information on the conduct of TP audits. The General Department of
Taxation (GDT) recently reported that during the first six months of
2014, a total of 557 enterprises classified as high risk were subject to
a TP audit resulting in the collection of VND579.3 billion in penalties
while tax deductions relating to losses totaling VND 1,517.2 billion
were denied.

In recent years, the Vietnamese tax authorities have
tended to focus on auditing companies in specific industries including
the clothing, footwear, garments and light manufacturing industries. In
2014 and beyond, however, the tax authorities have indicated that they
intend widening their TP audit focus by reviewing and auditing taxpayers
across other sectors and industries of the Vietnamese economy.

Please click here for more information and here for Vietnamese version.