Harmful Tax Practices – 2017 Peer Review Reports on the Exchange of Information on Tax Rulings

Viet Nam

Viet Nam has met all aspects of the terms of reference (ToR) for the calendar year 2017 (year in review), except for having in place a process for completion of templates and exchange of information on rulings (ToR II.5). Viet Nam is recommended to continue to put in place a process to complete the templates for all relevant rulings if needed and to ensure the timely exchange of information on rulings in the form required by the transparency framework.

Viet Nam can legally issue one type of ruling within the scope of the transparency framework.

In practice, Viet Nam issued no rulings within the scope of the transparency framework. It has currently received three requests for unilateral APAs which are under review or in a pre-filing stage.

As no exchange of information on rulings was conducted, no peer input was received in respect of the exchanges of information on rulings received from Viet Nam.

Introduction

1355.  This peer review covers Viet Nam’s implementation of the BEPS Action 5 transparency framework for the year 2017. The report has four parts, each relating to a key part of the ToR. Each part is discussed in turn. A summary of recommendations is included at the end of this report.

A. The information gathering process

1356.  Viet Nam can legally issue one type of ruling within the scope of the transparency framework: cross-border unilateral advance pricing agreements (APAs) and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles.

1357.  The process for gathering information about past rulings is explained first, followed by the process for gathering information about future rulings.

Past rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1, I.4.2.2)

1358.  For Viet Nam, past rulings are any tax rulings within scope that are issued either: (i) on or after 1 January 2015 but before 1 September 2017; or (ii) on or after 1 January 2012 but before 1 January 2015, provided they were still in effect as at 1 January 2015.

1359.  Viet Nam only recently introduced the unilateral APA practice. APAs would be issued by the large taxpayers department. When an APA request is received, it is assigned to a specific team of several tax officers within the large taxpayers’ division. The team is responsible for issuing the APA and for identifying it is relevant for the purposes of the transparency framework exchange and for identifying potential exchange jurisdictions. In practice, no APAs have been issued within the period defined as “past rulings”.

Future rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1)

1360.  For Viet Nam, future rulings are any tax rulings within scope that are issued on or after 1 September 2017.

1361.  The process for issuing future rulings is similar to the process for issuing past rulings. When a ruling is issued, the hard copy is stored in a cabinet within the large taxpayers’ division. A copy of the ruling is also kept at the relevant tax office. Information on the jurisdictions of residence of related parties with which the taxpayer enters into a transaction covered by the ruling is included in the ruling itself.

1362.  Taxpayers applying for an APA are obliged to provide information on the jurisdiction of the immediate and the ultimate parent entities. It is noted that in practice, no APAs have been issued within the period defined as “future rulings”.

Review and supervision mechanism (ToR I.4.3)

1363.  The accuracy of the information-gathering process is ensured by the management of the large taxpayers’ division, which supervises the process for all of the issued rulings.

Conclusion on section A

1364.  Viet Nam has met all of the ToR for the information gathering process and no recommendations are made.

B. The exchange of information

Legal basis for spontaneous exchange of information (ToR II.5.1, II.5.2)

1365.  Viet Nam has the necessary domestic legal basis to exchange information on rulings spontaneously.

1366.  Viet Nam is a party to international agreements permitting spontaneous exchange of information, including double tax agreements in force with 72 jurisdictions.1 Viet Nam is not a party to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011) (“the Convention”).

Completion and exchange of templates (ToR II.5.3, II.5.4, II.5.5, II.5.6, II.5.7)

1367.  The team of tax officers responsible for issuing APAs is responsible for completing the template contained in Annex C of the Action 5 report (OECD, 2015). After completing the template, it is sent to the Deputy Commissioner and to the Director of the large taxpayers division, who are both designated as the Competent Authority for exchange of information, and will then exchange it with the relevant exchange jurisdictions. At this stage, timelines for the transmission of the template to the Competent Authority, and for the completion of exchanges, have not been established.

1368.  As no rulings within the scope of the transparency framework have been issued in practice, Viet Nam was not required to complete any exchanges of information and there is no data to report on the timeliness of exchanges.

Conclusion on section B

1369.  Viet Nam is currently putting in place a process for completion of templates and exchange of information on rulings (ToR II.5). Viet Nam is recommended to continue to put in place a process to complete the templates for all relevant rulings if needed and to ensure the timely exchange of information on rulings in the form required by the transparency framework.

C. Statistics (ToR IV)

1370.  As there were no exchanges for the year in review, no statistics data can be reported.

E. Matters related to intellectual property regimes (ToR I.4.1.3)

1371.  Viet Nam offers an intellectual property regime (“IP regime”).2 However for the year in review no transparency requirements under the Action 5 report (OECD, 2015) were relevant, as follows:

• New entrants benefitting from the grandfathered IP regime: not applicable for the year in review, because the regime is currently under review by the FHTP.

• Third category of IP assets: not applicable to this regime, which in 2017 was under review by the FHTP.

• Taxpayers making use of the option to treat the nexus ratio as a rebuttable presumption: not applicable to this regime, which in 2017 was under review by the FHTP.

Summary of recommendations on implementation of the transparency framework

 

Aspect of implementation of the transparency framework that should be improved	Recommendation for improvement
Viet Nam is currently putting in place a process for completion of templates and exchange of information on rulings.	Viet Nam is recommended to continue to put in place a process to complete the templates for all relevant rulings and to ensure the timely exchange of information on rulings in the form required by the transparency framework.

References

OECD (2017), BEPS Action 5 on Harmful Tax Practices – Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD/G20 Base Erosion and Profit Shifting Project, OECD, Paris. www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparencyframework.pdf.

OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. https://doi.org/10.1787/9789264241190-en.

OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264115606-en.

Notes

← 1.  Viet Nam has bilateral agreements with Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium, Brunei Darussalam, Bulgaria, Canada, China (People's Republic of), Cuba, Czech Republic, Democratic People's Republic of Korea, Denmark, Estonia, Finland, France, Germany, Hong Kong (China), Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Kazakhstan, Korea, Kuwait, Lao People's Democratic Republic, Luxembourg, Malaysia, Malta, Mongolia, Morocco, Mozambique, Myanmar, Netherlands, New Zealand, Norway, Oman, Pakistan, Palestinian Authority, Panama, Philippines, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia, Seychelles, Singapore, Slovak Republic, Spain, Sri Lanka, Sweden, Switzerland, Chinese Taipei, Thailand, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, Uruguay, Uzbekistan and Venezuela.

← 2.  This is the IP benefits regime.