In 2018, Vietnam witnessed the most significant developments related to transfer pricing. Following the establishment of a transfer pricing audit department in the General Department of Taxes (GDT) and some key provinces such as Hanoi, Binh Duong, Dong Nai, and Ho Chi Minh City, in July 2016, the GDT announced the establishment of a Base Erosion and Profit Shifting (BEPS) Working Group, which is responsible for preparing action plans to implement the Organisation for Economic Co-operation and Development (OECD) BEPS Initiatives and overseeing the implementation process.
More recently, the Vietnamese government released Transfer Pricing Decree No. 20/2017/ND-CP guiding the implementation of transfer pricing (Decree 20) and guiding circular 41/2017/TT-BTC (Circular 41), which entered into effect from 1 May 2017. In 2018, various rulings guiding the implementation of Decree 20 and Circular 41 have been issued.
There is also a new decree on e-invoices, which aims to promote the use of e-invoices by most taxpayers.
The Ministry of Finance recently released draft tax laws amending the current laws on value-added tax (VAT), special sales tax (SST), corporate income tax (CIT), personal income tax (PIT), natural resources tax (NRT), and customs duty.
There are various changes proposed, notably as follows:
- Transfer of capital outside Vietnam will be subject to capital assignment profit tax at 2% on net gain.
- Preferential CIT rates (from 15% to 17%) will be granted to small and medium enterprises (SMEs).
- New CIT incentives have been introduced:
- Preferential 10% CIT for 15 years plus 4 years of exemption and subsequent 9 years of 50% reduction for investments in encouraged locations or sectors with especially difficult conditions;
- Preferential 17% CIT for 10 years plus 2 years of exemption and subsequent 4 years of 50% reduction for investments in encouraged locations or sectors with difficult conditions.
- Proposed to increase VAT rates to 11% from 1 January 2020 and 12% from 1 January 2022. Whereas the 5% VAT rate shall be increased to 6% from 1 January 2022.
The draft law, however, has been postponed at this stage.
There is also a draft Tax Admin Law, which was discussed in the National Assembly Meeting this year.