The APA method has been used effectively by many countries in the world, creating conditions for the enterprises to observe the laws of the investment receiving country and the capital exporting country.

As Mr. Cao Anh Tuấn, Deputy Director of the General Department of Taxation said, the advance pricing agreement is based on many elements such as market price, costs, profit rate so that the tax authority and the taxpayers can determine it together within 3 to 5 years.

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In accordance with this mechanism, the multi-national enterprises should be proactive in recommending their measures for pricing or price when the buying and selling activities are performed between the members in the group before declaring the tax payment and the Vietnam taxation agency which could coordinate with the foreign taxation agency to sign the Agreement on avoidance of double taxation with Vietnam will supervise and control it to fight against the fraud in transfer pricing.

On the other hand the addition of the APA will help enterprises to work out their business plans and fulfill their tax obligations, thus facilitating the tax collection.

Vietnam is now applying this method for big-sized enterprises with foreign investment capital like Samsung and Nokia and after some time, it will be put to use on a large scale to raise the effectiveness and fight against tax losses through transfer pricing./.