VIETNAM - PROCEDURES FOR BILATERAL AGREEMENTS (MAPS) IN ACCORDANCE WITH THE PROVISIONS OF TAX AGREEMENTS

In the context of increasing globalization, Vietnam has engaged in numerous Double Taxation Agreements (DTAs) with various countries. One critical mechanism available to taxpayers in instances of double taxation is the Mutual Agreement Procedure (MAP). The General Department of Taxation of Vietnam has promulgated Decision No. 2049/QD-TCT on 31 December 2021, which outlines the Internal Regulation of Tax Authorities concerning the execution of MAP in line with the stipulations of DTAs for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital.

The taxes predominantly subject to MAP encompass corporate income tax, personal income tax, and other specific taxes on income or assets as delineated in each respective tax agreement.

Key considerations include:

1. Responsibility:

The General Department of Taxation is tasked with the centralization of MAP request resolutions. This department delegates the responsibility to the Department of International Cooperation, which is charged with the receipt, analysis, and examination of MAP dossiers, as well as the negotiation process and the provision of guidance to subordinate tax authorities for the implementation of MAP outcomes. It is incumbent upon the competent Vietnamese authorities to facilitate the MAP process expeditiously, provided that the taxpayer has settled all tax liabilities, inclusive of any accrued interest and penalties, related to the taxes for which MAP is sought.

2. Procedural Timeline:

a. The competent Vietnamese authority must issue a Notice of receipt of the MAP request to the corresponding authority of the treaty partner within one month from the date of receiving the MAP request from a Vietnamese resident taxpayer, as per form No. 02/MAP attached to the Regulation.

b. Within seven days of receiving a MAP request from a treaty partner's tax authority, the competent Vietnamese authority must send a confirmation of receipt, as per form No. 03/MAP attached to the Regulation.

c. The General Department of Taxation has a two-month period from the receipt of the MAP application to review the dossier and determine whether to reject the MAP application, request additional information from the taxpayer, or accept the MAP application.

Commencement of MAP:

The initiation date for a MAP case is established as follows:

1. One week from the notification by the treaty partner's competent authority of receiving the MAP request from a resident taxpayer of that treaty partner, or five weeks from the date the Vietnamese competent authorities receive the MAP request from a Vietnamese resident taxpayer, whichever is earlier.

2. Should the MAP applicant fail to provide the requisite information and documentation within two months from the MAP request receipt, the "Commencement Date" will be the later of the date specified in Subsection (i) or the date on which all requested information and documentation are received.

For instance, if the Vietnamese tax authority receives a MAP request from a Vietnamese resident taxpayer on June 1, 2021, and subsequently, on July 1, 2021, communicates the MAP request to the Singapore Tax Authority, but the dossier is incomplete, a notice for supplementary information will be issued on August 1, 2021. Upon receiving the complete information on August 30, 2021, the "Start Date" will be determined as August 30, 2021, being the later of the two critical dates.

Vietnamese competent authorities will decline MAP applications in the following scenarios:

a) The MAP application dossier is outside the purview of the Vietnamese competent authority.

b) The MAP application dossier submission exceeds the three-year (or two-year, as specified in the DTA) timeframe from the issuance of a tax decision by the Vietnamese tax authority or treaty partner, which the taxpayer deems non-compliant with the DTA provisions.

c) The MAP applicant has not complied with the obligations as outlined in the tax decisions prior to, and during, the MAP application process, unless a suspension of the tax decision enforcement is decreed by the competent state agency.

d) The MAP applicant or related entity is currently under audit or examination, and no official conclusion has been reached.

e) The MAP application is perceived as an attempt to exploit the procedure for tax avoidance purposes.

There are forms and administrative procedures that the taxpayers should pay attention to when applying MAP procedures.

Please feel free to reach out to [email protected] if you have any thoughts in mind about application of MAP in Vietnam.