Mr Nguyen Quang Tien, Deputy Director of the Standing Committee of Reform and Modernisation, the General Department of Taxation, said that the transfer pricing management task is difficult, requiring the mastering of professional skills along with the power to do the task. So far, the tax sector has not been given the right to investigate. Therefore, it is difficult to efficiently manage transfer pricing activities.
In 2012, there were many issues involved in transfer pricing "tricks" among FDI enterprises. What is the solution to eliminate those "tricks"? Quite a few experts still believe that completing the legal system and increasing the capacity of the tax officials is among the main solutions to address the problem.
Lack of basement to determine prices
Ms Nguyen Thi Cuc, Chairwoman of the Vietnam’s Tax Consultancy Organisation said that the hard part now is that the management agency lacks evidence to compare the prices set by companies in different countries.
However, the exchange and supply of information between the tax authorities of Vietnam and other countries, according to Ms Cuc, is difficult because several countries tend to attract investment and protect the rights of its taxation. Therefore, the search for and the determination of market price is very difficult. In addition, the purchase of information is not always available.
According to Mr Vu Xuan Tien, Chairman of Member Board of VFAM Vietnam, a consultancy company, said that the current Tax Administration Law has no provisions on anti-transfer pricing. This is a loophole, though Vietnam has referred to many countries’ law.
Besides, according to Mr Tien, the trade relations of companies are legal, thus we have no reason to say that the contract is invalid. The ability to examine prices is sometimes beyond the right of tax authorities. Mr Tien said, for example, when a company in the United States sell its products for a company in Vietnam, if it suspects the price, it has to investigate, which requires the cooperation of tax authorities of the host countries and funding.
Preparation: better late than never
According to an official in the tax authority, each year the tax authority can only check about 12 percent of active companies. An enterprise which has been investigated will only be re- investigated seven years later. In foreign countries, tax officials can check enterprises’ revenues and expenditures thanks to payment transfers. Specifically, business enterprises are connected online to the tax authorities, thus they are able to know every single detail in enterprises’ expenditure. In Vietnam, tax officials have to come to enterprises to find documents. Sometimes, tax inspectors have to do that for months, since this work is not simple and requires a lot of time.
That same official said that the key now is to prepare a high-skilled labour force for the tax sector, but this is not simple. They have to be experts in international accounting, tax policy and foreign languages. Currently in the taxation force, there are not so many officials that can achieve those standards.
Mr Nguyen Van Thu, President of the Vietnam’s Mechanical Association assumes that it is necessary to build a database on specific industries and fields including material prices in the country and the world, information about the latest technologies, etc. as a basis for evaluation. In particular, associations and social organizations should take part in the review of price ceilings, price floors, technical barriers, and technology, since only associations can understand their own fields and what arises in the pricing process and technology.
If associations’ ability and critical social capacity is promoted and favourable conditions are created for them to participate in a number of public services, there is certainly effective management and monitoring of price transfer, said Mr Thu.
PV
Vietnamese
