Chapter I

GENERAL REGULATIONS

Article 1. Scope of regulation

This Circular provides guidance on application of Advance Pricing Agreements (APAs) to tax management.

Article 2. Subjects of application

1. A organization that manufactures and/or sells goods/services (Hereinafter referred to as taxpayers) that pays tax under the Law on Corporate Income Tax and makes tax statements using the method in Clause 1 Article 11 of the Law on Corporate Income Tax No. 14/2008/QH12 (Corporate Income Tax payable equals assessable income multiplied by tax rate), makes business transactions with related parties, and submits an APA application before stating and paying tax on the first year of the period covered by the APA (hereinafter referred to as covered period).

The taxpayers are the entities covered by the APA mentioned in Clause 3 Article 3 of this Circular.

2. Tax Administrations: the General Department of Taxation, Departments of Taxations of provinces.

3. State agencies, organizations and individuals related to the application of APA to tax management.

Article 3. Advance pricing agreement (APA)

1. An APA is a written agreement between a tax administration and a taxpayer, or between Vietnamese tax administrations, taxpayers, and a tax administration of a country or territory with which Vietnam has concluded a tax treaty for a certain period of time, where tax calculation basis, pricing methodologies, or market prices are determined. An APA must be concluded before the taxpayer submits the corporate tax statement.

2. Types of APAs:

a) A unilateral APA is an APA between a Vietnamese tax administration and an APA applicant (Hereinafter referred to as applicant).

b) A bilateral and multilateral APA is an APA between a Vietnamese tax administration, a taxpayer, and one or some foreign tax administrations related to the determination of tax liabilities of the applicants under the tax treaty.

3. The following entities are covered by APAs:

a) The organizations and units in an association with a company or corporation that operate in multiple localities (Including other countries or territories);

b) The organizations and units that are offices or head office of the company. In this case, every office is considered a separate company (Taxpayer) and is independent from the head office or other offices of the company.

4.  Transactions covered by the APA:

a) Sale, exchange, lease, transfer of goods and services during the business operation (Called business transactions) among related parties, except for the transactions related to the goods and services subject to price stabilization by the State.

b) The taxpayer may requests one or multiple related transactions covered by the APA. The taxpayer may combine multiple related transactions that are interdependent to reflect the objectivity and the conformity with business practice, which correspond to the functions, assets, and risks related to tax liabilities, in accordance with legislative documents on market price determination in business transactions among related parties serving tax statement

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