Vietnam has seen an influx of foreign investment as the economy continues to experience rapid growth. The Vietnamese tax authorities have stressed their intended focus on transfer pricing – up until very recently there was, however, only isolated instances of transfer pricing investigations or audits.
Spurred by government budgetary deficits and other areas of tax reform that continue to result in lower tax collections, transfer pricing has been identified as a key target area for enforcement. Over the past few months, there has been a significant increase in transfer pricing audits and investigations. The enforcement activity has comprised:
- Specific transfer pricing audits;
- Transfer pricing issues being a “mandatory inclusion” in broader tax audits; and
- Formal requests to submit transfer pricing documentation or explain the disclosures on the transfer pricing declaration form.