Introduction Scope of the Circular The application dossier
Transfer Pricing
The Advanced Pricing Agreement Circular and
the new transfer pricing declaration form
Circular 201/2013/TT-BTC (“the APA Circular”) released
on 20 December 2013 provides guidance on the
application of Advanced Pricing Agreements (“APA”).
The provisions of the APA Circular are similar to those in
the draft APA document which was circulated among
stakeholders, including Grant Thornton Vietnam, for
comments and opinions in late 2013. On a related note,
Circular 156/2013/TT-BTC dated 06 November 2013, has
introduced amendments to the Tax Administration Law,
including new tax finalisation forms and a new transfer
pricing return.
This Transfer Pricing Update highlights key provisions in
the APA Circular as well as the critical changes in transfer
pricing reporting requirements.
New declaration form Contact
The APA programme was officially mentioned in Law No
21/2012/QH13 which subsequently resulted in the release of
Decree No 83/2013/ND-CP providing more details on the
provisions of the updated Tax Administration Law.
To date, we have not seen an APA successfully concluded in
Vietnam. However, the programme is still in the early stages of
its development and it is further evidence of the Government’s
ongoing commitment to combat against transfer pricing abuses
while simultaneously easing the burdens on taxpayers. The
provisions of the APA Circular are summarised below for your
reference. Please note that these summaries do not fully reflect
the contents and requirements outlined in the APA Circular.
Please consult your professional advisors for more detail.
 Introduction Scope of the Circular The application dossier New declaration form Contact

Scope of the APA Circular

In essence, an APA is the process by which taxpayers seek
approval from the authorities regarding the pricing used in
related party transactions prior to such transactions occurring in
order to mitigate the risk of a price adjustment, and the
imposition of associated penalties, which is inherent with the
usual self-assessment system. An APA generally requires a
negotiation between the taxpayers and one or more tax
authorities from one or more jurisdictions. The scope of the
APA applies to any entities which are subject to the scope of
Corporate Income Tax regulations and paying tax on a net
profit basis in Vietnam. Various levels of APA are available
under the scope of the APA Circular, as listed below:
• Unilateral APA available for cases between the taxpayer and
the Vietnamese tax authority
• Bilateral APA involves the taxpayer, the Vietnamese
authorities and the tax authority of another jurisdiction
• Multilateral APA are offered for the taxpayer and the tax
authority of two or more jurisdictions.
The selection of which APA level is dependent upon the facts
surrounding the companies in questions and the involvement of
the tax authorities from the respective countries (pursuant to a
tax treaty) where the related entities are residing.
The general process of an APA can be summarised as per the
below diagram.
Pre filing consultation
Formal APA Request by lodging the official
application
Assessment of APA application dossier
Review and negotiation of APA request
– evaluation of request
– involvement of competent authority
– acceptance of request
Signing of APA

Annual APA reports

Renewal of APA (if applicable)

 Introduction Scope of the Circular The application dossier New declaration form Contact

The APA application dossier

In each stage of the APA application process (as illustrated in
the above diagram), requisite application forms are generally
required to be submitted. Fundamentally, the APA application
dossier requires a number of supporting documents throughout
the process, including a transfer pricing study to substantiate
the pricing method and the arm’s length rate proposed in the
APA application. It should be noted that the study is generally
required to be prepared for 3 to 5 years prior to the first year
for which the APA is being sought. A comprehensive, accurate
and transparent functional and economic analysis is critical to
the process. An important nuance to the APA Circular which is
not apparent in transfer pricing regulations is that data for the
economic analysis should follow a geographic hierarchy, in
which data should be sought first from Vietnam before
extending the search to regional, and subsequently global
comparables.
Please view other thought leadership documents, available on
our website, for further information relating to:
• Analysis on the impact of the APA programme - Draft
Vietnamese APA provisions
• International approaches to dispute prevention and conflict
resolution.
• Further analysis on the recent transfer pricing abuse cases in
Vietnam - Transfer pricing in Vietnam: Commentary on the
media focus
The APA Circular came into effect on 5 February 2014.

The APA Circular also provides for the participation of a The APA
professional consultant/advisor to the taxpayers during the Circular came
negotiation process. However, it is also clearly stated that the into effect on 5
analysis of the professionals is for reference only and will not be February 2014.
legally binding: ultimately, the deemed arm’s length rate is still
at the discretion of the authorities.
 Introduction Scope of the Circular The application dossier New declaration form Contact

New transfer pricing declaration form

Form 03-7/TNDN, declaring related party transactions, If you would like any further information on any of the
recently introduced in Circular 156/2013/TT-BTC dated 06 issues raised in this article or how we can assist your
November 2013 will replace Form GCN-01/QLT for taxpayers companies in the APA negotiation, please contact our
ending their financial year after 31 December 2013 and for transfer pricing specialists.
future assessment periods. The major change in the content of
the new declaration form is the requirement to disclose the
deviation between total/itemised revenues and expenses
generated based on the accounting records and those generated
based on the prices determined as arm’s length price. Thus,
enterprises are generally required to also disclose the
increase/decrease in their profits as a result of using the arm’s
length price.

This additional disclosure requirement means the preparation of

a transfer pricing study, including a benchmarking analysis to
arrive at arm’s length price, is essential in filing Form 03-
7/TNDN.
Taxpayers ending their year on 31 December should file Form
GCN-01/QLT for 2013, and begin using the new form from
2014 onwards. Taxpayers ending their financial year in 2014
should file Form 03-7/TNDN for the 2013-14 period.
 Introduction Scope of the Circular The application dossier New declaration form Contact

Contact
For additional information, please contact

Mr Matthew Facey Ho Chi Minh City Office

Tax Director, Tax Services 28th Floor Saigon Trade Center
T +84 3910 9100 37 Ton Duc Thang Street
E Matthew.Facey@vn.gt.com District 1, Ho Chi Minh City
T +84 8 3910 9100
F +84 8 3914 3748
Mr Tom Prescott
Transfer Pricing Specialist
Hanoi Office
T +84 8 3910 9211 8th Floor, Vinaplast - Tai Tam Building
E Tom.Prescott@vn.gt.com 39A Ngo Quyen Street
Hoan Kiem, Hanoi
Ms Nguyen Khanh Van T +84 4 2220 2600
Tax Executive F +84 4 2220 6449
T +84 8 3910 9128
E KhanhVan.Nguyen@vn.gt.com

© Grant Thornton (Vietnam) Ltd. All rights reserved.

Grant Thornton (Vietnam) Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are are not a worldwide partnership. Services are delivered by the member firms.
GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. Please see www.gt.com.vn for further details.

This publication has been prepared for information purposes only. No responsibility can be accepted by us for errors or omissions in this publication or for loss occasioned to any person acting or
refraining from acting as result of any material in this publication. If you want to take action based on this newsletter, please contact our specialists.