Since 2006, companies have had to submit, along with their corporate income tax return, an annual transfer pricing declaration form (form GCN-01) detailing their related-party transactions. The rule was unveiled in Circular 117/2005/TT-BTC, the first transfer pricing circular in Vietnam, which took effect from January 27 2006.

In a client alert, PricewaterhouseCoopers said compliance with this requirement by companies has been inconsistent.

It reports that a month ago, on September 15, the Ho Chi Minh City Tax Department issued Official Letter 3304/TB-CT requesting companies with related-party transactions to submit the required form by next week or pay a penalty.

In April this year, the tax authorities replaced the 2006 circular with Circular 66/2010/TT-BTC. This notice , which took effect on June 6 2010, told taxpayers that for financial years 2006 to 2009 their GCN form had to comply with Circular 117. After the effective date of this year’s circular, forms had to be in accordance with Circular 66.

“Clearly, this is now an area where the Vietnamese tax authorities are becoming more stringent,” Poh Wen Jean, a transfer pricing manager with PricewaterhouseCoopers, said .