Circular No. 201/2013/TT-BTC guides the application of Advance Pricing Agreements (APA) in tax administration.

CIRCULAR

Guidelines for the application of Advance Pricing Agreements (APA) on methods for determining taxable prices

in tax administration

_______________

 

Pursuant to the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006;

Pursuant to the Law Amending and Supplementing Certain Provisions of the Law on Tax Administration No. 21/2012/QH13 dated November 20, 2012;

Pursuant to the Corporate Income Tax Law No. 14/2008/QH12 dated June 3, 2008, and the Law Amending and Supplementing Certain Provisions of the Corporate Income Tax Law No. 32/2013/QH13 dated September 16, 2013;

Pursuant to the Government Decree No. 84/2009/NĐ-CP dated October 15, 2009 on trading in gasoline and diesel fuel;

Pursuant to Decree No. 124/2008/NĐ-CP dated December 11, 2008 of the Government detailing certain provisions of the Corporate Income Tax Law, and Decree No. 122/2011/NĐ-CP dated December 27, 2011 of the Government amending and supplementing certain provisions of Decree No. 124/2008/NĐ-CP of the Government detailing and guiding the implementation of certain provisions of the Corporate Income Tax Law;

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of the Director General of the State Revenue总局局长的提议；

The Minister of Finance hereby issues this Circular guiding the application of Advance Pricing Agreements (APA) on methods for determining taxable prices in tax administration as follows:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides the application of Advance Pricing Agreements (APA) on methods for determining taxable prices in tax administration.

Article 2. Applicability

1. Organizations engaged in production, trading goods, and services (hereinafter referred to collectively as taxpayers) are taxpayers under the Corporate Income Tax Law and implement tax declarations according to the method prescribed in Clause 1, Article 11 of the Corporate Income Tax Law No. 14/2008/QH12 (the corporate income tax payable for the tax period is calculated by multiplying the taxable income by the tax rate), and conduct business transactions with related parties and submit applications for the application of APA before fulfilling their obligation to declare and pay taxes for the first year of the requested APA period.

Taxpayers applying APA shall comply with the provisions of Clause 3, Article 3 of this Circular.

2. Tax authorities include: General Department of Taxation, Provincial Tax Departments, and Municipal Tax Departments.

3. State agencies, organizations, and individuals related to the application of APA in tax administration.

Article 3. Advance Pricing Agreement (APA)

1. APA is a written agreement between the tax authority and the taxpayer or between the tax authority and the taxpayer and the tax authorities of countries or territories where Vietnam has signed a Tax Treaty for a specific period, specifying the bases for taxation, methods for determining taxable prices, or market-based taxable prices. APA is established before the taxpayer submits the declaration of corporate income tax.

2. Forms of APA include:

a) Unilateral APA is an APA negotiated and signed between the Vietnamese tax authority and the taxpayer who requests the application of APA.

b) Bilateral or multilateral APA is an APA negotiated and signed between the Vietnamese tax authority, the taxpayer, and one or more partner tax authorities relevant to the determination of the taxpayer's tax obligations based on the Tax Treaty.

3. The subjects applying APA under this Circular include:

a) Organizations and units having related party relationships within a business or economic group operating in different areas (including countries and territories).

b) Organizations and units that have a relationship as permanent establishments and headquarters of a business. In this case, each permanent establishment will be considered as a separate taxpayer and completely independent from the headquarters or other permanent establishments of the business.

4. Transactions subject to APA

a) Transactions involving the purchase, sale, exchange, lease, rental, transfer, or assignment of goods and services during business operations (collectively referred to as business transactions) between related parties, except for business transactions related to goods and services implemented for price stabilization within the scope regulated by the State according to the laws on pricing.

b) Taxpayers have the right to request one or more related party transactions to apply APA. Taxpayers may combine multiple interrelated related party transactions into an overall transaction to reflect the objectivity consistent with actual practices and business customs corresponding to the functions, assets, and business risks related to tax obligations for the tax declaration period in accordance with the guidelines on determining market prices in business transactions between related parties for tax declaration purposes.

Article 4. Definitions

1. The concepts of "Market Price," "Product," "Related Parties," and "Standard Market Price Range" are implemented in accordance with the regulations of guiding documents on determining market prices in business transactions between related parties.

2. "Tax Treaty" is a shortened term for the Double Taxation Avoidance Agreement and the Prevention of Tax Evasion on Income Taxes currently in effect in Vietnam; "partner tax authority" is the tax authority of the country or territory with which Vietnam has signed a Tax Treaty.

3. "Materiality": This term is used to express the importance of information (a figure) used in the APA application file and the APA implementation process. Information is considered material if its absence or lack of accuracy would affect the decisions of the parties involved in APA.

The materiality of information must be considered both quantitatively and qualitatively and implemented in accordance with the guidance of Vietnamese Auditing Standard No. 320 "Materiality in Planning and Performing Audits" issued together with Circular No. 214/2012/TT-BTC dated December 6, 2012 of the Ministry of Finance.

Article 5. Principles for Applying APA

1. APA is applied on the principle that the tax authority and the taxpayer (the subject of APA) or the Vietnamese tax authority and the partner tax authority signing the Tax Treaty and the taxpayer cooperate in exchanging and negotiating the application of legal provisions regarding the fulfillment of corporate income tax obligations for related party transactions based on the arm's length principle according to market prices.

2. The application of APA aims to enhance the effectiveness of tax management, reduce compliance costs with tax laws, determine market prices in related party transactions consistent with the nature of business operations to generate appropriate profit levels for income tax obligations, prevent double taxation and tax evasion, minimize disputes over determining market prices in related party transactions. During the APA negotiation period, taxpayers shall declare and pay taxes according to the current legal regulations.

3. Methods for determining market prices in related party transactions within the scope of APA shall be carried out in accordance with legal guidelines on determining market prices in business transactions between associated parties. When selecting methods for determining market prices to apply in APA, the essence and calculation method should be considered rather than the name of the method.

Article 6. Competence to resolve APA applications

1. The Ministry of Finance approves negotiation plans, signing, amending, extending, revoking, and canceling APA.

2. The General Department of Taxation is responsible for receiving APA applications, conducting negotiations, signing, amending, extending, revoking, and canceling APA, and organizing inspections, audits, and supervision of APA implementation.

3. Provincial Tax Departments participate in negotiations and organize the implementation of APA according to their management functions and tasks.

Chapter II

PROCEDURES, PROCEDURAL REQUIREMENTS AND CONTENT OF APA

Article 7. Procedures for resolving APA applications

The procedures for resolving APA applications include the following stages:

a) Pre-submission consultation;

b) Submission of formal application;

c) Review of APA application;

d) Exchange and negotiation of APA contents;

đ) Signing and circulating APA.

Article 8. Pre-submission consultation

1. Pre-submission consultation is conducted based on the taxpayer's request to exchange and determine the suitability of the APA application.

2. Cases for pre-submission consultation include:

a) Taxpayers planning to apply APA (regardless of whether it is the first submission or applying APA for related party transactions not covered by existing effective APA).

b) Taxpayers submitting APA extension applications: applicable when taxpayers are nearing the expiration date of the existing APA; tax authorities may suggest taxpayers consider extension or taxpayers may proactively request extension.

c) Taxpayers who have signed a unilateral APA with the tax authority but wish to switch to bilateral or multilateral APA, or vice versa.

d) Taxpayers agreeing with the tax authority's recommendation to apply APA.

3. Taxpayers submit a written request to the General Department of Taxation to convene a consultation meeting regarding the scope of APA, including:

a) A consultation request form number 1/APA-TV issued together with this Circular.

b) Information for consultation as stipulated in Clause 4 of this Article.

4. Taxpayers provide information for consultation with the tax authority, including:

a) Name and address of the taxpayer expected to submit the APA application and names and addresses of related party transaction participants;

b) Type of APA proposed; names of countries or territories involved in the case of bilateral or multilateral APA proposals;

c) Description of related party transactions within the scope of APA, related party transactions outside the scope of APA (if any), and explanations for choosing APA transactions and excluding other related party transactions;

d) Scale of value of related party transactions;

đ) Expected duration of APA application;

e) Analysis of functions, assets, and risks borne during business operations of the taxpayer and related parties participating in transactions within the scope of APA;

g) Proposed method for determining market prices, including comparative analysis, comparison data, calculation methods, standard market price range, significant adjustments (if any);

h) Important assumptions significantly affecting APA application conditions;

i) General information about the scope and scale of the taxpayer's business activities and related party transactions; information about the economic group's operations (including but not limited to industry, capital, structure, scale of business) and related parties relevant to the anticipated APA-related transactions;

k) Summary of key contents regarding the results of tax inspections already conducted at the taxpayer's headquarters;

l) APAs concerning similar related party transactions already signed or proposed to foreign tax authorities (if any);

m) Views of relevant foreign tax authorities (if any);

n) Date of formal application submission and contact methods;

o) Other issues affecting APA implementation (including but not limited to information on market analysis; business strategies, policy impacts, other tax obligations...).

5. Through the consultation process, taxpayers must provide comprehensive information, data, and supporting documents for the General Department of Taxation to base its decision on accepting or rejecting the taxpayer's formal APA application submission.

6. The results of each consultation round will be recorded in the Consultation Minutes. Within thirty working days from the end of the consultation, based on the conclusions in the APA Consultation Minutes and the actual conditions of the tax sector, the General Department of Taxation will issue a written response to the taxpayer regarding acceptance or (reasons for) non-acceptance of permission for the taxpayer to submit a formal APA application.

Article 9. Submitting Official Documentation

1. The official application for APA must be submitted to the General Department of Taxation within 120 days from the date the taxpayer receives the approval document from the General Department of Taxation regarding the submission of the official APA documentation.

In cases where the taxpayer is unable to submit the documentation on time due to reasonable and objective reasons, they must provide a request for extension in writing and obtain approval from the General Department of Taxation. The extension period shall not exceed 30 days from the original deadline for submission.

2. Official Application Documentation for APA

The documentation includes Form No. 2/APA-CT issued together with this Circular and detailed information as required, including:

a) Identification information about the taxpayer and related parties involved in the associated transactions covered by the APA application

a.1) Name and address of the taxpayer and the parties participating in the transaction covered by the APA application (including tax authorities of countries or regions that have signed tax agreements with Vietnam for bilateral or multilateral APA applications)

a.2) Tax registration number of the taxpayer (including main office and branch/subsidiary numbers if applicable)

a.3) Detailed business addresses

a.4) Information on the primary industry classification of the taxpayer and related parties

b) Type of associated transaction, scale of transaction, and duration of APA application

b.1) Associated transactions within the scope of APA, associated transactions outside the scope of APA (if any), and explanations for selecting the transactions to apply APA, excluding other associated transactions

b.2) Scale of value of the associated transaction

b.3) Proposed form of APA to be applied

b.4) Duration requested for applying APA

c) Description of information about the position of the taxpayer and the group

c.1) General information about the history and business model of the group

c.2) Organizational structure of the group and organizational structure of the taxpayer

c.3) Overview description of the group's value chain and the position of the associated transactions within the scope of APA in that value chain

c.4) Detailed description of the flow of transactions related to the associated transactions within the scope of APA and similar associated transactions conducted in other countries or regions (if any)

c.5) Capital structure and related party relationships (including but not limited to: direct or indirect investment value; loan value; proportion of investment capital between parties...)

c.6) Characteristics of business activities and major business areas of related parties

c.7) General description of the group's business strategy and its impact on the taxpayer (if any)

c.8) Description of the business strategy the taxpayer plans to implement during the period of APA application, including business plans for the next five years or business cycles after the APA application date and business results in the three years prior (if there are differences compared to the years when APA will be applied)

d) Economic sector information analysis

Analysis of economic sector information and market trends that may affect the taxpayer's business operations, including:

d.1) Description of the taxpayer's market share

d.2) Basic information analyzing challenges, opportunities, and factors driving market growth from economic sector information

d.3) Other relevant information about the economic sector such as state policies and regulations, including those affecting the economic sector from countries or regions outside Vietnam

đ) Detailed analysis of functions, assets, and risks of the taxpayer and related parties

đ.1) For each taxpayer and each party participating in the APA, detailed information must be provided on the analysis of functions, assets, and risks, including the allocation of resources and physical facilities among the parties (if applicable). In cases where assets include intellectual property or intangible assets, the ownership, usage, form, registration protection period, and value of intangible assets in the pricing structure of goods and services within the scope of APA must be clearly stated, đ.2) Accounting system applied, currency used at each related party, and currency used in the associated transactions within the scope of APA

đ.3) Detailed information on the value chain and transaction flows related to the associated transactions within the scope of APA and similar transactions outside the scope of APA

đ.4) Description of production, supply, distribution processes of goods and services related to the associated transactions within the scope of APA and outside the scope of APA

đ.5) Detailed description of goods and services of the taxpayer related to the associated transactions within the scope of APA and outside the scope of APA

đ.6) Information describing major suppliers and customers of the taxpayer

đ.7) Description of transactions with independent third parties (if any)

e) Financial information

e.1) Audited financial statements, annual reports, and final income tax returns of the taxpayer for the three consecutive years preceding the year of APA application. For taxpayers established less than three years ago, audited financial statements, annual reports, and final income tax returns for the period of operation should be provided

For related parties, audited financial statements, annual reports, and final income tax returns (if relevant) for the three consecutive years preceding the year of APA application should be provided

In cases where the taxpayer and related parties prepare financial statements reflecting business results by detailed industry sectors or product lines, these additional details should be provided along with the audited financial statements

e.2) Other relevant market and financial information and plans (including but not limited to: expansion investment plans, restructuring plans for production and business operations of the taxpayer or related parties)

g) Market price determination method

g) Method for determining market price

Information on the proposed method for determining market price, data sources, information serving as the basis for comparative analysis, the method of calculating product prices, gross profit margin, and return rates related to associated party transactions within the scope of APA includes:

g.1) Detailed analysis of the proposed method for determining market price applicable to transactions within the scope of APA; reasons for choosing and demonstrating that applying this method will result in a price consistent with the market price;

g.2) Detailed analysis of the comparison data, reasons for selecting comparison data, and explanation of the compatibility and suitability of the data with the determined pricing method; other adjustments to exclude significant differences when conducting the comparison analysis (if any);

g.3) Explanation of the implementation method for determining market price during the APA application period based on financial information from associated party transactions (including but not limited to: determination, calculation of price levels, gross profit margin, or return rates, and anticipated impact on revenue and cost figures from associated party transactions within the scope of APA);

g.4) Explanation and application of the proposed method for determining market price to actual financial data of the taxpayer for the three to five years prior to the request for APA application, corresponding to the requested APA application period if the proposed pricing method differs from the method used previously. If the taxpayer has been established for less than three years, then the proposed pricing method should be applied to the time already in operation;

g.5) General information on the methods for determining market price applied by the taxpayer and related parties within the group for similar associated party transactions;

g.6) In cases where the taxpayer conducts business transactions with independent third parties similar to those conducted with associated parties subject to APA application, the taxpayer must provide detailed information about the scale and explain how the price of these independent transactions was determined. If such independent transactions are not selected as the subject of comparative analysis, the taxpayer must explain the reason for not selecting them;

h) Important assumptions significantly affecting or substantially changing the commitments and implementation process of APA, mainly including:

h.1) Changes in the capital contribution structure of the associated parties involved in APA;

h.2) Changes in business functions, assets invested for business operations, and risks borne by the taxpayer in business operations (including but not limited to: the taxpayer developing intangible assets, intellectual property assets;...); changes in accounting methods;

h.3) Changes in tax policies, changes in foreign exchange management regulations;

h.4) Changes in business licenses, markets, and state mechanisms and policies affecting the taxpayer (including but not limited to issues such as product bans, product recalls, destruction,...);

i) Information describing the fulfillment of corporate income tax obligations at the relevant location, region, territorial area related to transactions within the scope of APA and the relationship between domestic laws and relevant tax treaties (including the scope, context of potential double taxation or non-tax liability (if any));

k) Copies of the main contents of APAs already signed by the taxpayer and related parties applied to similar associated party transactions within the scope of APA;

l) Copies of contracts, legal agreements between the taxpayer and related parties affecting transactions within the scope of APA such as agreements on ownership, use, purchase, sale, distribution of goods and services, research and development,...

Any other relevant information about associated party transactions such as other tax issues, international tax issues like tax incentives, conclusions of inspection procedures (including transfer pricing inspections), decisions, notifications regarding the implementation of bilateral agreement procedures under the tax treaty (if any);

3. The APA application dossier shall be prepared in three copies and written in Vietnamese; in cases of bilateral and multilateral APA applications, the dossier shall be written in Vietnamese and accompanied by an English translation; for original documents written in other languages, Vietnamese and English translations (for bilateral and multilateral APA dossiers) must be attached along with the original document. The taxpayer must sign and stamp the translation and bear legal responsibility for its content. In addition to submitting the dossier in writing, the taxpayer must also provide the documents in the dossier in electronic form (soft copy);

If the dossier contains numerous attached documents (such as lists of companies selected for comparative analysis, price range determination,...) and it is unreasonable to print and translate all content into Vietnamese to submit together with the APA application dossier, the taxpayer must summarize the content, explain the reasons, and specify the location and method of storing the documents so that the tax authority can access and review them upon request;

4. In cases where the taxpayer submits a bilateral or multilateral APA application dossier, the information and data submitted to the Vietnamese tax authority and the foreign tax authority shall be similar and not less than the information and data specified above.

Article 10. Review of the application proposal file APA

1. The maximum time for the General Department of Tax to conduct the review of the APA application proposal file is 90 days from the date of receipt of the taxpayer's formal APA application proposal file in accordance with regulations.

In cases where the review of the APA application proposal file exceeds 90 days, the General Department of Tax will notify the taxpayer in writing about the extension of the review period. The extended period shall not exceed 60 days.

2. Within 15 days from the date of receipt of the taxpayer's formal APA application proposal file, the General Department of Tax and the taxpayer will organize meetings to exchange information and agree on the plan and procedures for subsequent steps to resolve the APA application proposal file.

3. During the review process of the APA application proposal file, the General Department of Tax may apply the following measures if necessary:

a) Requesting the taxpayer and other related organizations or individuals to provide and explain information or conduct work sessions with the taxpayer to confirm and affirm relevant information and data related to the APA application proposal file;

b) Conducting on-site surveys at the taxpayer's headquarters (including all business premises at different locations related to the taxpayer).

4. The scope of reviewing the APA application proposal file includes tasks to assess, inspect, and determine the completeness and objectivity of the files and information provided by the taxpayer so that the tax authority can issue an evaluation regarding the reasonable market price determination method as the basis for negotiating with the taxpayer and the foreign tax authority (if necessary). The contents of the review include the following main points:

a) Determining, evaluating, and comparing the information and data provided by the taxpayer with actual information and data on production and business activities, capital investment, accounting practices...;

b) Determining, evaluating, and collecting information and evidence on analyzing functions, assets (including but not limited to the use and exploitation of physical facilities serving business operations, allocation and payment of common expenses...) and risks borne by the taxpayer during business operations (including but not limited to determining the scale and level of inventory risk, credit and payment risk...);

c) Determining, evaluating, and collecting information and evidence related to comparative analysis (including identifying and searching for customer, supplier, and competitor information of the taxpayer) and determining and selecting a market price determination method suitable for the taxpayer's business characteristics;

d) Determining, checking, and evaluating the necessary information and data to be collected from third parties (including exchanging information with foreign tax authorities);

e) Collecting information and assessing the reasonableness of important assumptions.

5. The consultation, working sessions, or on-site surveys at the taxpayer's headquarters are recorded in a Minutes of Record by both the tax authority and the taxpayer.

6. For bilateral or multilateral APA application proposal files, if the foreign tax authority requests the taxpayer to provide and explain information and data (regardless of whether such information and data belong to the initial filing or supplementary filing), the taxpayer has the responsibility to provide these documents to the tax authority to ensure that the competent authorities of the participating tax authorities in the APA are provided with similar and sufficient information to resolve the APA application proposal file.

7. In cases where the General Department of Tax needs to exchange information with the foreign tax authority during the resolution process, the taxpayer will also be generally informed about the content of the exchanged information, and the received information will be used as documentation and evidence in negotiating and signing the APA, except for information that cannot be disclosed to the taxpayer according to the provisions of the information exchange clause under the Tax Agreement.

Article 11. Exchange and Negotiation of APA Content

The method for conducting exchanges and negotiations on APAs may be carried out through organizing meetings, direct or indirect face-to-face meetings via telephone, video conferencing, or exchanging written documents through correspondence.

1. In the case of a unilateral APA:

The content of the exchange and negotiation is the draft APA prepared by the tax authority; the tax authority may send the draft to the taxpayer in advance.

2. In the case of a bilateral or multilateral APA:

The representative of the tax authority is the authorized official responsible for contacting the authorized official of the partner tax authority regarding the discussion and negotiation of the APA according to the bilateral agreement procedures of the relevant Tax Treaty.

During the bilateral or multilateral negotiation process between related tax authorities, if necessary and agreed upon by the authorized officials of the related tax authorities, the taxpayer may appoint a representative to attend at the invitation of the tax authority to provide additional information, documents, or explanations on related issues.

The tax authority may notify the taxpayer of summarized information about the progress and results of the negotiations; simultaneously, it may request the taxpayer to supplement information, data, or explain relevant contents.

Article 12. Signing and Circulation of APA

1. The draft APA after being agreed upon by the tax authority and the taxpayer or by the related tax authorities on all content is called the final draft and will be signed for circulation.

2. The final draft of the APA must include at least the following contents:

a) Names and addresses of the associated parties participating in the APA;

b) Description of the related transactions within the scope of the APA;

c) Method for determining the market price as the basis for taxation, the manner of determining and calculating figures on prices, gross profit margins, and return rates as the basis for determining the taxable value related to the related transactions subject to APA (including the standard market price range if appropriate);

d) Important assumptions that may significantly impact the implementation process of the APA (including analysis and forecast contents);

đ) Provisions regarding the responsibilities and obligations of the taxpayer;

e) Provisions regarding the responsibilities and obligations of the tax authority;

g) Provisions regarding the effective application;

h) Other provisions consistent with legal regulations concerning the fulfillment of tax obligations related to the APA commitment;

i) Appendices, if any (including but not limited to: term explanations, explanatory information, supplementary explanations...).

3. For the case of a unilateral APA, the final draft will be sent along with a notification letter regarding the formal signing by the tax authority; the legal representative of the taxpayer shall sign and stamp the final draft APA and return it to the tax authority for signing and circulation.

4. For the case of a bilateral or multilateral APA, the General Department of Taxation prepares the final draft based on the terms agreed upon between the General Department of Taxation and the partner tax authority and sends it to the taxpayer along with a letter requesting the taxpayer's written response regarding approval (no objection) of the final draft content. Representatives of the related tax authority and the legal representative of the taxpayer carry out the signing and stamping of the bilateral or multilateral APA. The General Department of Taxation is responsible for announcing and circulating the bilateral or multilateral APA.

5. The official language used in APA documents is Vietnamese; in the case of a bilateral or multilateral APA, an English translation will also be used.

Article 13. Selection of APA Form

1. The taxpayer shall determine and propose the form of APA to be unilateral, bilateral, or multilateral at the time of submitting the application for APA.

2. During the processing of the APA file, the tax authority and the taxpayer may adjust a bilateral APA or a multilateral APA to a unilateral APA or vice versa. The cases where the APA form can be adjusted are:

a) The partner tax authority does not participate in negotiating the APA.

b) The Vietnamese tax authority and the partner tax authority cannot reach an agreement on the content of the APA after the negotiation period exceeds the APA negotiation practice.

c) Through information exchange or the implementation of bilateral procedures under the Tax Agreement, the authorized officials of the Vietnamese tax authority and the partner tax authority, based on the taxpayer's approval, agree to convert a unilateral APA into a bilateral or multilateral APA.

Article 14. Selected Information Data for Comparative Analysis and Determination of Market Range Standard Market Price Range

1. The database selected for comparative analysis and determination of the standard market price range is public data as prescribed by law, such as:

a) Audited financial reports;

b) Economic sector data; publicly disclosed data according to stock market operation regulations and charters;

c) Information and data from state agencies, research institutes, associations, and specialized organizations recognized and responsible for publicly disclosing or providing information upon request by the State;

d) Information and data from organizations and individuals legally operating in the field of information provision;

đ) Other official sources.

2. When selecting independent transactions for comparative analysis and determination of the standard market price range, it should be done in the following priority order:

a) Domestic objects;

b) Objects in countries in the region with economic conditions similar to Vietnam;

c) Objects in Southeast Asia;

d) Objects in the Asia-Pacific region;

đ) Objects in other regions around the world.

Article 15. Participation of Independent Experts

The tax authority and the taxpayer have the right to invite or hire independent experts with skills and knowledge relevant to the content of the APA to participate in discussions, negotiations, or the preparation of explanatory documents to explain issues related to the resolution, exchange, or negotiation of the APA. The opinions of independent experts are used by the tax authority as reference information and do not have a binding legal nature.

Independent experts have the right to access files, information, and documents during the APA file processing and are responsible for maintaining confidentiality according to the law and contractual obligations established in civil contracts signed between the taxpayer or the tax authority and the expert.

Article 16. Withdrawal of Application and Suspension of APA Negotiations

1. The withdrawal of the application or suspension of APA negotiations may occur at any time before the APA is signed.

2. The taxpayer requests the withdrawal of the application or suspension of negotiations by submitting a written request to the General Department of Taxation.

3. The General Department of Taxation requires the suspension of negotiations in the following cases:

a) Related party transactions within the scope of the APA and tax liabilities arising from transactions subject to dispute or complaint regarding administrative tax management violations;

b) Related party transactions within the scope of the APA are arranged with the purpose of evading taxes or exploiting the Tax Agreement;

c) The taxpayer does not provide or provides incomplete necessary files, documents, and information as required by the tax authority;

d) The taxpayer provides inaccurate information and data to the tax authority;

đ) Specific cases such as when the tax authorities agree to suspend bilateral or multilateral APA negotiations.

In the case of suspending APA negotiations, the General Department of Taxation will notify the taxpayer and the foreign tax authority (for bilateral or multilateral APAs).

Chapter III

MANAGEMENT, SUPERVISION OF APA COMPLIANCE AND OTHER REGULATIONS

Article 17. Rights and Obligations of Tax Payers during the Implementation of APA

1. Tax payers have the obligation to retain relevant files and documents during the negotiation, signing, and implementation of APA and provide them to the tax authority upon request.

2. Annual APA Report

a) Tax payers submit the Annual APA Report file along with the Corporate Income Tax Final Return File.

b) Tax payers submit the Annual APA Report along with the form for information on related party transactions number GCN-01/QLT issued together with Circular No. 66/2010/TT-BTC dated April 22, 2010 of the Ministry of Finance guiding the determination of market price in business transactions between associated parties.

c) The Annual APA Report file includes the following contents:

c.1) The Annual APA Report according to Form No. 3/APA-BC issued together with this Circular.

c.2) Additional explanatory information as follows:

- Information describing changes in functions, assets, and risks in the taxpayer's business operations and the calculation of data on prices, gross profit margin, return on investment (if applicable) based on the pricing method stated in the APA as the basis for declaring tax obligations for related party transactions;

- Information describing compliance with APA regulations (including updates or changes to key assumptions);

- Information describing adjustments to the taxpayer's tax obligations under signed APAs: changes in indicators leading to increases or decreases in tax obligations;

- The taxpayer's opinion on continuing to implement or changing APA provisions and other related issues (if any, including but not limited to new issues arising or tax disputes related...).: issues arising newly or disputes related to tax...).

3. Reports upon Request of the Tax Authority

Tax payers are responsible for providing information, documents, or explanations regarding the implementation of APA to the tax authority within thirty days from the date of receiving a written request from the tax authority.

4. Unexpected Reports

In case of events occurring during the implementation of APA that significantly affect the continued implementation of APA or impact the taxpayer's production and business results and tax declarations, the taxpayer has the responsibility to report to the tax authority within thirty days from the occurrence of the event (referred to as an unexpected report). Within thirty days from the date of receiving the unexpected report, the tax authority has the responsibility to respond, guide the taxpayer to take appropriate measures to mitigate the impact (including but not limited to: adjusting, supplementing, or terminating the effectiveness of APA).

5. In cases where unilateral APA implementation leads to double taxation or adjustments to taxable income resulting in disadvantage to the taxpayer due to decisions made by the partner tax authority, the taxpayer has the right to request the competent authority of the tax authority to carry out bilateral procedures under the Tax Agreement to resolve such disadvantages.

Article 18. Rights and Responsibilities of the Tax Authority

1. The tax authority has the responsibility to monitor the implementation of APA by taxpayers based on risk management principles. The scope of APA monitoring includes:

a) Verifying the actual compliance with the provisions of signed APAs (including pricing methods);

b) Checking tax declarations and payments and adjustments to taxable income according to APA provisions;

c) Checking and verifying periodic reports and unexpected reports submitted by taxpayers in accordance with actual occurrences.

2. The tax authority's monitoring does not aim to re-evaluate or re-assess APA.

Article 19. Bilateral Advance Pricing Agreement (APA) Procedures

1. Taxpayers who are tax residents in Vietnam wishing to apply for bilateral or multilateral APAs and requiring assistance from the tax authority in contacting and negotiating with the partner tax authority must submit an application form according to Model No. 4/APA-MAP issued together with this Circular, including the following information:

a) The name, address, and tax identification number (if available) of the taxpayer in another country participating in the APA, and the relationship between the parties involved in the APA (including organizational charts);

b) The name(s) and address(es) of the tax authority(ies) in the other country where the taxpayer files tax returns;

c) Explanation of the reasons for requesting a bilateral or multilateral APA;

d) Summary of the content describing the need for assistance;

đ) Relevant documents and materials circulated by the partner tax authority (including but not limited to notices or decisions on additional tax assessments that may result in double taxation on income from related party transactions).

Accompanying this application form is the APA file containing the information and data as prescribed, submitted to the General Department of Taxation.

2. Within thirty days from the date of receipt of the request for initiating bilateral APA procedures and the formal APA application file, the authorized authority of the General Department of Taxation shall contact and exchange information with the authorized authority of the partner tax authority in accordance with the provisions of the relevant tax agreement's bilateral APA procedure.

Within fifteen days from the date of receipt of the response from the authorized authority of the partner tax authority, the tax authority shall inform the taxpayer about the results of the exchanges and guide the taxpayer to fulfill the requirements agreed upon among the authorized authorities.

3. The authorized authority of the Vietnamese tax authority under the tax agreement is the Minister of Finance and the person(s) authorized by the Minister.

The authorized authority serves as the point of contact and communication channel (receiving and sending documents and notifications) between the Vietnamese tax authority and the partner tax authority during the processing of the APA application and monitoring the implementation of bilateral and multilateral APAs.

Article 20. Confidentiality of Information

1. The tax authority and taxpayers have the responsibility to maintain confidentiality of information and data used throughout the APA file processing period (including all procedures, evaluation processes, discussions, negotiations, signing, and circulation of APAs) in accordance with the provisions of the Law on Tax Administration, Clause 3, Article 6.

2. In cases where the APA negotiation is suspended, withdrawn, canceled, or revoked, the information and data provided by the taxpayer in the formal APA application file, provided upon request, annual APA reports, and special reports will not be used by the tax authority as evidence or documentation to serve inspection, audit, or tax assessment purposes.

Article 21. Adjustment of Taxable Income During APA Implementation

1. During the implementation of the APA, taxpayers adjust their taxable income in accordance with the prices or profit margins or profit rates stipulated in the APA to comply with tax filing regulations.

2. For taxpayers who have filed corporate income tax final return declarations for years prior to signing the APA, they must file supplementary corporate income tax final return declarations to adjust their taxable income in accordance with the prices, profit margins, or profit rates (if applicable) within thirty days from the date of signing the APA, except when there is a decision by the tax authority or competent authority to inspect or audit taxes.

If the supplementary declaration increases the amount of corporate income tax payable, the taxpayer must pay the additional tax and late payment interest at the lowest rate currently in effect.

If the supplementary declaration decreases the amount of corporate income tax payable, the procedures for handling overpaid tax refunds shall be carried out in accordance with the regulations.

3. In cases where taxpayers comply with the conditions and provisions of the APA, but in a quarter or year, payments occur that reduce provisional quarterly or annual tax liabilities, the taxpayer must report these issues to the tax authority in writing within thirty days from the date of occurrence of such payments. The taxpayer adjusts the corporate income tax final return declaration after receiving the tax authority's opinion.

Example: Company A implemented an APA in 201x with a requirement that pre-tax income must achieve a profit margin of 5% on revenue. However, in 201x, due to large payments, the profit margin on revenue only reached 4.5%. Assuming that the payments were actually incurred in the previous fiscal year (201x-1) and were paid by bank transfer on January 2, 201x, this payment might need to be adjusted to the deductible expenses of the previous fiscal year (201x-1).

4. In cases where taxpayers have related party transactions outside the scope of the APA that are identical or similar in nature to those covered by the APA and have not been conducted based on market prices, taxpayers may apply the pricing method specified in the APA to adjust their tax obligations in accordance with Article 34 (Supplementary Tax Return Filing) of the Law on Tax Administration.

Article 22. Legal Liability of Tax Payers in Providing Information

Tax payers have the responsibility to provide complete, truthful, and accurate information and data to tax authorities during the negotiation, signing, and implementation of APA. Tax payers shall be liable under the law for the truthfulness and accuracy of such information.

Chapter IV

EFFECTIVENESS OF APA

Article 23. Effectiveness of APA

1. An APA that has been signed will become binding and enforceable with respect to the tax authority and the tax payer when all provisions and obligations stipulated in the APA are fully complied with by the tax payer.

2. The effectiveness period of APA shall not exceed five years. The effective date shall not precede the date on which the tax payer submits the application for APA.

Article 24. Extension of APA

1. APA may be extended for up to five additional years.

2. APA may be considered for extension in cases where:

a) The scope of related party transactions and related parties do not undergo significant changes;

b) Significant assumptions do not undergo significant changes;

c) The standard market price range or gross profit margin or return on sales ratio used as the basis for comparative analysis remain stable during the extension period.

3. Procedures for extending APA

a) The tax payer submits an application for APA extension to the tax authority at least six months before the expiration of the signed APA;

b) The procedures for handling the APA extension application are similar to those for the application for APA.

Article 25. Amendment of APA

1. The amendment of APA is based on the proposal of the tax payer or the tax authority.

2. Cases for amending APA:

a) Significant assumptions are subject to substantial changes due to objective reasons;

b) Changes in laws affect APA;

c) The competent authority of the partner tax authority requests an amendment and is approved by the General Department of Taxation;

d) Other cases (such as mutual agreement between the parties involved in APA...).

Article 26. Revocation of APA

1. Cases for revoking APA:

a) The tax payer or any related party involved in the related party transaction does not comply with the terms and conditions of APA;

b) The tax payer makes errors or serious mistakes in the application for APA, annual APA report, or extraordinary APA report;

c) The tax payer fails to provide complete information and documents for the annual APA report or information, documents, and extraordinary reports as required by the tax authority;

d) The tax payer and the tax authority cannot reach an agreement on the conclusion of APA amendment;

đ) The partner tax authority requests the revocation of APA and is approved by the General Department of Taxation;

e) The tax payer submits an application for APA revocation with reasonable grounds.

2. The General Department of Taxation issues a notification regarding the revocation of APA. This document includes the following contents:

a) Reasons for revocation;

b) Effective date of APA revocation.

3. The tax payer shall fulfill tax obligations arising from the transactions mentioned in the revoked APA according to current regulations on determining market prices in business transactions between related parties for tax purposes from the date the revocation becomes effective.

Article 27. Withdrawal of APA

1. Cases for withdrawing APA:

a) The tax payer intentionally provides false information or engages in fraudulent behavior in applying APA, implementing reporting systems, or during the process of requesting APA amendments.

b) The partner tax authority requests the withdrawal of APA and is approved by the General Department of Taxation.

2. The General Department of Taxation issues a notification regarding the withdrawal of APA. This document includes the following contents:

a) Reasons for withdrawal;

b) Effective date of withdrawal (from the first day of the APA application period).

3. The tax payer shall fulfill tax obligations arising from the transactions mentioned in the withdrawn APA according to current regulations on determining market prices in business transactions between related parties for tax purposes from the date the withdrawal becomes effective.

Chapter V

IMPLEMENTATION

Article 28. Administrative Sanctions for Tax Violations

A taxpayer who commits an administrative violation related to tax during the implementation of an APA that has been signed shall be subject to administrative sanctions for tax violations in accordance with current regulations.

Article 29. Effective Date

This Circular takes effect from February 5, 2014.

During the implementation process, if there are difficulties, organizations and individuals are requested to promptly reflect to the Ministry of Finance for research and resolution./.