FIEs resist MoF demands for more transfer pricing data
FIEs resist MoF demands for more transfer pricing data
Multinational companies are refusing to divulge what they deem corporate secrets in response to the local authorities’ requirement that foreign-invested enterprises provide more information on related-party transactions in order to combat transfer pricing and tax avoidance.
A number of foreign-invested enterprises (FIEs) have expressed concerns about the Ministry of Finance’s recent renewal of the requirement that FIEs make a global master file about the parent company and its international operations available, as per Decree No.20/2017/ND-CP, taking effect from May 1, 2017, on the tax administration of enterprises with related party transactions. This is aimed at combating transfer pricing and tax avoidance.
Japanese motobike maker Yamaha Motor Vietnam, for example, spoke out in a missive to the MoF that the decree increases the burden on taxpayers to comply with tax administration procedures, as FIEs are required to provide the global master file and a duplicate copy of a country-by-country report of their ultimate parent company based in a foreign country. Yamaha decried this requirement as an infringement on corporate secrets.
Yamaha Motor Vietnam is far from the only firm to refuse the MoF’s demand on these grounds, as a series of multinational firms have been quick to issue similar statements.
In case taxpayers fail to provide or provide insufficient information, they will face tax assessment. So far, no firm has been reported to see such action.
Nguyen Huong Giang, tax partner at PwC Vietnam, previously told VIR that Decree 20 represents the most important development of the transfer pricing regime in the last 10 years in Vietnam, as it demonstrates the country’s commitment to align with the global tax framework on transparency and anti-avoidance.
