Nation prevents abuse of transfer pricing
Thomas Borstell, Global Director of transfer price services at accounting giant Ernst & Young, tells Viet Nam News the country is headed in the right direction.
What is the core of the transfer pricing controversy in Viet Nam? What are the solutions for preventing abuse of transfer pricing?
Transfer pricing has become very important compared with previous years. Many countries are now trying to adopt regulations on transfer price and make companies obey the regulations.
To conclude that a multinational company (Abused) transfer pricing to avoid tax, we should study the specific situation. Viet Nam's tax authorities should take gradual steps to cope with transfer pricing issues.
What are the common solutions adopted in other countries which can be applied in Viet Nam?
Transfer is an important issue for multinational companies. Viet Nam has the same regulations related to this issue that tax authorities around the world do. I think Viet Nam is among the first countries to issue regulations related to transfer price.
The first step is very clear. It wants us to have rules. Viet Nam has experience in preventing abuse of transfer pricing. From what I know, Vietnamese regulations are very much the same with the Organisation for Economic Co-operation and Development's (OECD) guidelines.
The next step is to provide training so that tax authorities can gain experience and knowledge to deal with new transfer pricing developments.
What is Ernst & Young's goal in Viet Nam? Helping multinational companies comply with regulations and assisting tax authorities with transfer pricing issues?
We as an accounting firm help tax payers comply with Vietnamese rules. It is very clear we help the tax payers in several ways such as creating documents for transfer pricing which are necessary or required under the law.
Currently, many foreign companies are investing in Viet Nam. In future, there will be several Vietnamese companies investing in foreign countries. In that case, we can help enterprises comply with transfer pricing regulations.
We have good relations with tax authorities in many countries. We train them in transfer pricing. Last year, we began a training course for Chinese tax authorities on the car industry.
Recently, the European Commission has started transfer pricing training in four countries and one of them is Viet Nam. The more knowledgeable the officials are, the easier for tax payers to comply with regulations and for tax authorities to tackle with transfer price issues.
Do you think that if Viet Nam makes transfer pricing rules tougher its investment environment will become less attractive to foreign investors?
The transfer pricing rules that Viet Nam has are allied with globally accepted guidelines issued by the OECD. Multinational companies are used to the guidelines and Viet Nam itself has a very attractive tax regime that strict enforcement of transfer pricing rules will not make Viet Nam less attractive to foreign investors.
Are you planning to provide training to Vietnamese tax authorities in transfer pricing?
We have held training courses for tax authorities in other countries. We are ready to offer training to Vietnamese tax authorities if required.
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