Many foreign businesses delocalize their production facilities in Vietnam and charge their foreign outposts for administrative, technical, financial, and commercial services. However, financial administration teams need to be aware that their transactions must comply with the arm’s length and substance-over-form principles.
Before the government released Providing tax administration applicable to enterprises having controlled transactions (‘Decree 20’) in April 2017, transfer pricing rules in Vietnam were lax. Investors could enter the market without worrying too much about their transfer pricing policies.
This is an exerpt from an article appearing in Vietnam Briefing, a subsidiary of Dezan Shira & Associates. For the latest economic, regulatory and business news from Vietnam, visit vietnam-briefing.com.