Transfer pricing control remains lax: minister
Minister of Finance Dinh Tien Dung on May 22 voiced concerns over transfer pricing during the investment phase, saying Vietnam has yet to strengthen the oversight in this phase.
Speaking at a discussion at the ongoing National Assembly on the country’s socio-economy, Dung said that the management over the investment phase remains lax despite huge capital flow, adding that some US$15-17 billion of registered foreign direct investment (FDI) capital and disbursement is reported each year. Dung, however, questioned who controlled the amount of registered capital and disbursement and whether the amount matched the value declared for investment in Vietnam by firms.
As such, effective management of transfer pricing is an urgent mission, Dung said.
The amended law on tax management, however, has helped tighten control over transfer pricing in the FDI sector, the minister noted.
Customs authorities have launched some 6,900 inspections after customs clearance and proposed financial sanctions of up to VND3.7 trillion. The taxman also collected VND1.5 trillion in tax arrears in 2018.
Regarding the tax collection management, the minister said that customs authorities carried out over 95,900 inspections into tax payments related to transfer pricing in the FDI sector in 2018, and proposed collection of VND19 trillion for the State budget.
Dung added that the number of newly established enterprises was reported at 131,300, mainly super-small, small and medium firms, in 2018 while as many as 107,000 firms were shut down or dissolved, leading to the loss of tax revenue.
Apart from newly established firms not having to pay tax immediately, that new enterprises and large ones are entitled to tax preferential policies or exempted from corporate income tax has also caused difficulty in the country’s tax collection, Dung said.