Vietnam: Tax and transfer pricing implications of technology transfers
Vietnam: Tax and transfer pricing, technology transfers
New measures concerning technology transfers have tax and transfer pricing implications in Vietnam.
New contract registration requirements
Law No. 07/2017/QH14 (the “law on technology transfer”) will be effective 1 July 2018 and replaces a 2006 law. The 2017 law provides that technology transfer contracts that must be registered with the competent authorities of science and technology concern:
- Technology transfers from other countries to Vietnam
- Technology transfers from Vietnam to other countries
- Technology transfers domestically for which state capital or the state budget is used, except in instances when certificates of registration for results of performing scientific and technological tasks have been granted
Tax, transfer pricing implications
During tax audits and inspections, the tax authorities in Vietnam usually request that taxpayer enterprises provide the technology transfer contract registration dossiers to allow for evaluation of claims for deductibility of technology transfer fees. The 2006 law did not require registration of transfer contracts. With the new measures, the tax authorities will have stronger legal grounds to exclude the costs of the technology transfer from deductible expenses if the technology transfer contract is not registered.
In addition, the 2017 law stipulates that the technology transfer price in the following instances must be audited and implemented in accordance with the tax and price law:
- Technology transfers between parties when one or more parties have state capital
- Technology transfers between related parties within a holding company
- Technology transfers between related parties in accordance with tax laws
According to the 2017 measures, the tax authorities may request the enterprises receiving the technology to provide the audited technology transfer dossiers and dossiers on how market prices were determined for the transferred technologies in order to determine the expenses deductible for corporate income tax calculation purposes.
Read a July 2017 report [PDF 205 KB] prepared by the KPMG member firm in Vietnam
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