Nguyen Thanh Luan

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My country: Vietnam

News article name: “Vietnam: foreign retailers face tax inspection”

Author: Dezan Shira & Associates

Website name: Vietnam Briefing

Date: June 16, 2017

1 of the 4 activities which lead to international accounting problems: Pricing of inter

company sales. This leads to one accounting problem and that is transfer pricing regulation

s have to be executed. Below is the excerpt of the news article about how multinational co

mpanies in Vietnam attempted to avoid taxes by engaging in intercompany transactions, w

hich prompted the government to take steps in introducing new laws regarding transfer pri

cing.

“ Vietnam’s General Department of Taxation has asked local tax authorities to inspec

t foreign-owned retailers for tax avoidance through transfer pricing or profit shifting. The a

uthorities will be auditing corporate tax, VAT, personal income tax, and foreign contractor t

ax for the period 2012-2016. Along with the direct and indirect taxes, the department is als

o planning to monitor franchising or ownership transfer of foreign retailers for unpaid taxe

s.

To ensure tax compliance, Vietnamese government released the Decree 20 earlier th

is year, which is in effect since May 1, 2017. It included changes in transfer pricing regulatio

ns, new documentation and declaration requirements, and guidance on the deductibility of

related-party expenses and interest. […]

 Nguyen Thanh Luan
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Last year the hypermarket Big C Vietnam, was asked to pay VND 2 trillion (US$88 mi

llion) in taxes based on its capital gains tax obligations, after it was sold to Thailand’s Centr

al Group by France’s Casino Group for 1 billion euros (US$ 1.14 billion). Similarly Metro Cas

h & Carry, the German retailer was asked to pay VND 507 billion ($23.63 million) in tax arre

ars, after tax officials found that the multinational had engaged in transfer pricing. Metro C

ash & Carry was also asked to pay VND 1.9 trillion ($85.25 million) in taxes, after its sale to

Thai company Thailand’s Central Group in 2015. […]”

Seeing that Vietnam is continuing to attract foreign-owned retailers and the number

of foreign enterprises are on the rise, tax officials will continue to execute stricter tax compl

iance. Because the government estimates that almost half of the enterprises evade taxes by

exploiting legal loopholes, with the new Decree 20, the government has taken a newer mea

sure to erase existing loopholes and provide further clarity for international companies. Ho

wever, some people consider this only as a desperate step from the government to bring d

own the itching government debt, trying to make the foreign companies to shoulder the br

unt of the national debt.