Vietnam: Transfer pricing audits, related-party royalty | KPMG | GLOBAL
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Vietnam: Transfer pricing audits of related-party royalty, service fee payments

Vietnam: Transfer pricing audits, related-party royalty

Following new laws and guidance issued earlier in 2017, provincial tax authorities have enhanced their focus on reviewing and challenging what until now were “historical” corporate income tax deductions for royalties and service fee payments made to related parties of Vietnamese taxpayers.


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The tax authorities recently have been seen to apply the “substance over form” principle for implementing the management, examination, and inspection of related-party transactions for prior years. Based on this principle, related-party transactions that are inconsistent with the arm’s length principle or that do not provide direct economic benefits and add value to the business activities of taxpayers will be rejected. One of the 2017 law changes concerning technology transfers reinstates a requirement that companies must register their technology transfer agreements with the relevant state body, and for the first time, this new law allows for an audit of the pricing of inbound technology transfers.

KPMG observation

Enterprises with related-party transactions involving intangibles or intra-group services need to consider reviewing their transactions and also need to consider preparing all necessary supporting documentation.


Read an October 2017 report [PDF 81 KB] prepared by the KPMG member firm in Vietnam that contains useful examples and recommendations

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