Vietnam Works to Prevent Lost Revenue17th May 2022
Just when you thought transfer pricing scrutiny was at its peak, another country steps it up a notch. Case in point: Vietnam. The Southeast Asian country is taking special steps to ensure that the tax revenue owed to Vietnam stays in Vietnam. In fact, last month, the General Department of Taxation issued an official letter (769/TCT-TTKT) requesting that tax authorities up their game on preventing revenue loss. Tax authorities were asked to ensure that invoicing, tax refunds, e-commerce, and transfer pricing all result in the correct amount of tax collection. How will they manage that? Audits. In fact, the General Department of Taxation has also urged that tax authorities strengthen their tax audit processes and collect tax liabilities resulting from audits immediately.
Risk assessments and tax transparency are key to the process and tax authorities will work with competent authorities in the exchange of information—the goal being to uncover companies with high transfer pricing risk and those suspected of tax evasion. While Vietnam requires that contemporaneous documentation be prepared—but not necessarily submitted—taxpayers would be wise to prepare documentation as though it were going to be examined. Thoroughly. After all, when tax authorities make investments in improving risk assessment strategies and audit processes, that usually means they intend to use them.