APA – an effective remedy against transfer pricing (VOV) - Enforcing the Advance Pricing Agreement (APA) mechanism is considered an effective solution for combating transfer pricing which has been reportedly increasing among multinational corporations (MNCs) in Vietnam.  At a recent seminar in Hanoi, Dang Tuan Hiep, a General Department of Taxation official, noted since 2000 MNC transactions have accounted for more than 70% of the global total, with their annual revenue of approximately US$6,000 billion. Transfer pricing is a hot issue that has garnered the great attention of taxation agencies throughout the world, because MNCs can directly affect the allocation of profits to individual countries by increasing or decreasing the price they charge each other, even though the profits of the group as a whole remain unchanged. Many countries including the US, Japan and the Republic of Korea have formulated APAs as a special instrument for dealing with tax disputes for tax agencies and between tax agencies and MNCs.  In late 2013 the Vietnamese Ministry of Finance issued a circular, guiding APA implementation, creating an important legal corridor for preventing tax evasion and minimizing disputes about market price evaluation in related-party transactions. Colin Clavey, a senior consultant on APA of the International Financial Corporation, and Sabine Wahl, an independent consultant, shared experience in reaching viable APA deals, saying both tax agencies and tax payers must prepare necessary conditions before negotiations. Businesses should have meetings and consultations before submitting an APA dossier to the tax agency. Receiving the dossier, it is the tax agency’s task to study the payers’ economic, trading and tax payment reports in order to come up with proper negotiation plans. When the two sides agree on price levels, provisions, and payment methods, they can then proceed to enter into agreements to apply the APA, Clavey and Wahl concluded. In the initial periods of implementing an effective APA, Vietnam should limit the number of fields it is applied to and as the legal foundation and experience expand it can be expanded accordingly, to a wider number of fields. VOV