Hanoi (VNA) - An internationalworkshop on “Transfer pricing – Critical issues of current state management” was held in Hanoi on July19, drawing 200 delegates from the National Assembly, ministries, central and localagencies, professional associations, universities, research institutes,international organisations as well as domestic and foreign businesses.

Opening the event, held by the State Audit of Vietnam (SAV) and the Associationof Chartered Certified Accountants (ACCA), Ho Duc Phoc, Auditor General of theSAV, said in today’s globalised world, transfer pricing among affiliates thatfall under different countries’ jurisdictions has become common practice. Ithas become a serious issue in every country in the world.

Transfer pricing was new in Vietnam 10years ago, but today it is a common practice of not only foreign directinvestment (FDI) enterprises but also Vietnamese enterprises (domestic transferpricing), he said.

Transfer pricing, which has created unfaircompetition among economic actors, is pricing transactions of goods, servicesand intangibles between related parties such as a parent company and itsaffiliates.

Transfer pricing aims to minimise theobligation of enterprises to pay taxes so they can maximise their profits. Apartfrom tax avoidance, this practice has been used to charge high prices forcertain goods in markets without intense competition.

The most common forms include the practiceof transfer pricing to the value of investment assets, meaning that businesseswill declare a much higher value (above the market price) in order to reducefuture tax obligations.

Vietnam has made great efforts to create alegal framework for the tax sector to fight transfer pricing of enterprises, hesaid.

However, the legal framework remains inconsistentwith many loopholes, and is not effective.

Phan Vu Hoang, Chairman of the Associationof Chartered Certified Accountants (ACCA) in Vietnam, said that the action planon Base Erosion and Profit Shifting (BEPS), which refers to tax avoidancestrategies that exploit gaps and mismatches in tax rules to artificially shiftprofits to low or no tax, is being implemented in many countries, including Vietnam.

Multinational corporations, includingVietnamese enterprises wishing to invest abroad and foreign firms wishing toinvest in Vietnam, will need to ensure compliance with countries’ transferpricing regulations for their investment projects.

At the workshop, participants focused theirdiscussions on price transferring in Vietnam and its impact on the economy;assessing the management in the field as well as shortcomings in management;and the role of the SAV, while proposing some solutions.-VNA