Circular 45 Sets Out New Rules on Advance Pricing Agreements in Vietnam

Posted by Written by Ayman Falak Medina Reading Time: 2 minutes

On June 18, 2021, Vietnam’s Ministry of Finance issued Circular 45/2021/TT-BTC (Circular 45), which sets the new rules on the Advance Pricing Agreements (APA) mechanism in Vietnam. Circular 45 entered into force on August 3, 2021, and replaces the existing APA Circular 201, which was issued in 2013.

An APA is a procedural agreement between the taxpayer and tax authorities (TA) that aims to avoid any transfer pricing disputes by determining in advance the basis of the tax calculation for specific cross-border controlled transactions within a specific period to ensure the taxpayer’s compliance with the arm’s length principle.

What are the notable changes in Circular 45?

Eligible transactions under an APA

The eligible party transactions to be covered by the APA must meet the following conditions simultaneously:

  • Must have incurred during the course of business and will continue to occur during the proposed period of time;
  • Must have the bases to determine the nature of the transaction and must be benchmarked in accordance with the Law on Tax Administration and Decree 132/2020/ND-CP (Decree 132);
  • Transactions are not subject to tax disputes/tax investigation; and
  • Transactions are carried out transparently and not for tax avoidance or the abuse of tax treaties.

The related party transactions are those mentioned under Decree 132.

What are the APA application procedures?


To reduce the administrative burden for taxpayers, there is now no need to file a pre-filing consultation request to the General Department of Taxation (GDT).

Taxpayers can directly submit an APA documentation dossier together with Form 02/APA-CT under Appendix III of Decree 126 to the GDT. The dossier must be prepared in Vietnamese, unless for multilateral or bilateral APAs in which case taxpayers will translate the dossier into English and submit the document along with Form 03/APA-MAP. 

The APA application appraisal

After the formal application has been received, the GDT will evaluate the dossier to compare and determine the accuracy, legality, and validity of the information. During this process, the GDT may ask the taxpayer to clarify any of the information they provided.

APA discussions and negotiations

In this stage, the APA will discuss directly with the taxpayer concerning their APA application to reach the final APA draft. These discussions will cover aspects such as the obligations and responsibilities of taxpayers, in addition to the responsibilities and powers of tax authorities.

The validity period of an effective APA is up to three years but should not exceed the number of years the taxpayer has operated in business and declared and paid corporate income tax in Vietnam.               

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