Basic Information of the Company

This part of the questions aims to understand the basic situation of your company and potential transfer pricing risk factors. Please answer truthfully based on the actual situation.

1. Does your company have any related-party transactions?

□ Yes □ No

Note: Related-party transactions are the basis of transfer pricing risk. If you select “Yes”, it means your company needs to pay attention to transfer pricing compliance.

2. Do your company’s related parties include overseas entities?

□ Yes □ No

Note: Cross-border related-party transactions are usually subject to higher transfer pricing risks as they may involve tax jurisdictions of different countries.

3. Does your company’s total annual related-party transactions exceed VND 30 billion (approximately USD 1.3 million)?

□ Yes □ No

Note: According to Vietnamese regulations, companies with more than this amount need to prepare transfer pricing documentation. If you select “Yes”, it means your company has more transfer pricing documentation obligations.

4. Has your company suffered losses for more than 3 consecutive years?

□ Yes □ No

Note: Long-term losses may attract the attention of the tax authorities, especially if the associated companies are profitable.

5. Is your company’s profit margin significantly lower than the industry average?

□ Yes □ No

Note: Profit margins that are significantly lower than the industry average may trigger transfer pricing investigations, and the tax authorities may suspect profit shifting.

Assessment Guidelines:

• If you answer “yes” to both questions 1 and 2, it means that your company faces basic transfer pricing risks and needs to pay attention to relevant compliance requirements.
• If you answered “yes” to question 3, your company is required to prepare detailed transfer pricing documentation.
• If you answered “yes” to questions 4 or 5, your company may face a high transfer pricing audit risk and is recommended to conduct an in-depth self-assessment and make necessary adjustments.

Please note that these questions are only a preliminary assessment and the specific risk needs to be considered in combination with other factors. It is recommended that you continue to complete the other parts of the questionnaire to obtain a more comprehensive risk assessment.

Types of Related-Party Transactions

This part of the questions aims to understand the specific types and characteristics of your company’s related-party transactions. Different types of related-party transactions may face different transfer pricing risks. Please answer truthfully based on the actual situation.

6. Does your company have the following types of related-party transactions? (Multiple selections are allowed)

□ Commodity purchase and sale

□ Service transactions

□ Intangible asset transactions (such as royalties)

□ Financing transactions (such as intra-group loans)

□ Fixed asset transactions

□ Others (please specify): _______

Note: Different types of related-party transactions may require different transfer pricing methods and analysis strategies.

Purchase and sale of goods: The comparable uncontrolled price method or the resale price method can usually be used.

Service transactions: cost plus method or transactional net profit method are commonly used.

Intangible asset transactions: may require more complex analysis, such as profit split methods.

Financing transactions: usually need to consider market interest rates and credit risks.

Fixed asset transactions: may involve asset valuation issues.

7. Does your company have any transactions with related parties in low-tax regions or tax havens?

□ Yes □ No

Note: Transactions with low-tax jurisdictions or tax havens are often of high concern to tax authorities because they may be used for tax planning or profit shifting.

Assessment Guidelines:

• If you selected multiple options in question 1, it means that your company has a variety of related-party transactions and may need a more comprehensive transfer pricing management strategy.
• For each type of transaction, you need to ensure that you have the appropriate pricing policies and supporting documentation.
• If you answer “yes” to question 2, your company may be exposed to high transfer pricing risks and needs to pay special attention to the pricing reasonableness and economic substance of these transactions.

Suggestion:

• Establish detailed pricing policies and procedures for each type of related-party transaction.
• Maintain adequate documentation to demonstrate the reasonableness and fairness of each type of transaction.
• For transactions with low-tax jurisdictions, prepare additional supporting documentation to demonstrate the commercial necessity and reasonableness of the pricing of the transaction.
• Consider separate risk assessment and management for different types of transactions.

Please continue to complete the rest of the questionnaire to get a more comprehensive risk assessment. If you find that certain transaction types are particularly complex or risky, it is recommended to seek professional advice.

Transfer Pricing Policy and Documentation

This section of questions is designed to assess your company’s compliance status in transfer pricing policy formulation and documentation preparation. Sound policies and documentation are key to effectively managing transfer pricing risks. Please answer truthfully based on the actual situation.

8. Does your company have a formal transfer pricing policy?

□ Yes □ No

Note: A formal transfer pricing policy is the basis for an enterprise to manage transfer pricing risks. It should clearly define the pricing principles, method selection and implementation process for related-party transactions.

9. Does your company prepare transfer pricing documentation (local file and master file) every year?

□ Yes □ No

Note: According to Vietnamese regulations, companies that meet certain conditions are required to prepare annual transfer pricing documentation. These documents are key evidence to prove the compliance of related-party transactions.

10. Does your company complete transfer pricing documentation within the prescribed period (90 days after the end of the financial year)?

□ Yes □ No

Note: Timely completion of documentation is not only a regulatory requirement, but also helps companies identify and manage potential risks early.

11. Does your company’s transfer pricing documentation cover all significant related-party transactions?

□ Yes □ No

Note: Comprehensive documentation should cover all significant related-party transactions, including their nature, amount, pricing method and reasonableness analysis.

Assessment Guidelines:

• If you answer “No” to question 1, it indicates that your company may have fundamental deficiencies in transfer pricing management that need to be addressed as a priority.
• If you answered “no” to questions 2 or 3, your company may be facing compliance risks and may need to adjust its document preparation processes.
• If you answered “no” to question 4, it may mean that your company’s documentation is not comprehensive enough and there is a potential risk.

Suggestion:

• If a formal transfer pricing policy does not exist, one should be developed as soon as possible. The policy should cover all types of related-party transactions and be updated regularly.
• Establish a systematic process to ensure timely preparation of complete transfer pricing documentation each year.
• Implement internal review mechanisms to ensure document quality and completeness.
• Consider using specialist software or hiring outside consultants to assist with document preparation, especially for complex transactions.
• Review policies and documents regularly to ensure they reflect the latest business circumstances and regulatory requirements.

Please note that comprehensive policies and documentation are not only a compliance requirement, but also an important tool for corporate self-protection. If you find significant deficiencies in this area, it is recommended that you take measures to improve it as a priority.

Transfer Pricing Methodology

These questions are designed to assess your company’s practices in selecting and applying transfer pricing methodologies. Appropriate transfer pricing methodologies are essential to demonstrating arm’s length compliance in related party transactions.

12. Does your company adopt appropriate transfer pricing methods for different types of related-party transactions?

□ Yes □ No

Note: Different types of related-party transactions may require different transfer pricing methods. For example, transactions involving tangible goods may be subject to the comparable uncontrolled price method, while transactions involving services may be more suitable for the cost-plus method. Choosing the appropriate method is important to accurately reflect the economic substance of the transaction.

13. Does your company regularly review and update the transfer pricing methods used?

□ Yes □ No

Note: Market conditions and business operations may change, so it is necessary to review and update the transfer pricing method regularly. This helps to ensure that the selected method remains applicable to the current business environment.

14. Does your company retain documentation of the decision-making process for selecting transfer pricing methods?

□ Yes □ No

Note: Keeping documentation of the decision-making process for method selection is important to justify your company’s choice of method. In a tax audit, this documentation can help explain why a certain method was chosen over another.

Assessment Guidelines:

• If you answered “No” to question 12, we recommend that you review your company’s transfer pricing methodology immediately to ensure that the most appropriate methodology is used for each related-party transaction.
• If you answered “no” to question 13, it is recommended that you establish a regular review mechanism, at least once a year or when there are major changes in the business.
• If you answered “no” to question 14, it is recommended that you begin documenting your decision-making process for method selection, including other methods considered and the rationale for the final selection.

Please note that choosing the appropriate transfer pricing method is not just a matter of compliance with regulations. It is also an important tool to ensure that the company’s related-party transactions are fair and reasonable. If you answer most of these questions “no”, it may indicate that your company is at risk in the application of transfer pricing methods. It is recommended to seek professional advice to improve relevant practices.

Financial Data and Comparability Analysis

This section of questions is designed to assess your company’s financial analysis and comparability studies on transfer pricing. These analyses are key to proving that related-party transactions comply with the arm’s length principle. Please answer truthfully based on the actual situation.

15. Does your company conduct comparability analysis regularly to support the pricing of related-party transactions?

□ Yes □ No

Note: Regular comparability analysis is an important part of transfer pricing compliance. This helps ensure the reasonableness of pricing in related-party transactions and provides support for possible tax audits.

16. Does the pricing of your company’s related-party transactions fall within the quartile range of comparable companies?

□ Yes □ No □ Not sure

Note: Generally, pricing that falls within the quartile range of comparable companies is considered to be in line with the arm’s length principle. If pricing falls outside the range, transfer pricing risk may increase.

17. Can your company explain any significant differences with comparable companies?

□ Yes □ No

Note: Even if the pricing falls within the quartile range, if there is a significant difference with comparable companies, it is necessary to be able to provide a reasonable explanation. This ability to explain is crucial to responding to possible tax inquiries.

Assessment Guidelines:

• If you answered “No” to question 15, your company should consider establishing a mechanism to conduct regular comparability analysis, which is fundamental to managing transfer pricing risks.
• If you answered “no” or “unsure” to question 16, we recommend that you conduct a deeper analysis to understand whether your pricing is reasonable and consider whether adjustments are needed.
• If you answered “No” to question 17, you should strengthen your analysis of your company’s special circumstances and prepare documentation so that you can explain the differences to the tax authorities when necessary.

Please note that comparability analysis is the core of transfer pricing compliance. If you answer more “no” or “uncertain” to these questions, it means that your company may have a higher risk in this regard. It is recommended to seek professional help to improve relevant capabilities.

Regularly conducting comprehensive financial analysis and comparability studies not only helps meet compliance requirements, but also provides strong support for the company’s pricing decisions and reduces potential transfer pricing risks.

Internal Control and Risk Management

This section of questions is designed to assess your company’s internal control and risk management capabilities in transfer pricing management. Effective internal control and risk management are critical to reducing transfer pricing risks.

18. Does your company have a dedicated team or personnel responsible for transfer pricing management?

□ Yes □ No

Note: Setting up a dedicated transfer pricing management team or designating a dedicated person to be responsible can ensure that transfer pricing matters are managed continuously and professionally. If you select “Yes”, it means that your company has given due attention to transfer pricing management.

19. Does your company provide transfer pricing related training to employees on a regular basis?

□ Yes □ No

Note: Regular training can improve the transfer pricing awareness and expertise of relevant personnel, and help to identify and respond to potential risks in a timely manner. If you select “Yes”, it means that your company is continuously improving its transfer pricing management capabilities.

20. Does your company have internal procedures to ensure timely collection and updating of related-party transaction information?

□ Yes □ No

Note: Establishing a systematic information collection and update process can ensure the accuracy and timeliness of transfer pricing documents and declarations. If you select “Yes”, it means that your company has basic transfer pricing information management capabilities.

Assessment Guidelines:

• If you answer “yes” to all three questions above, it indicates that your company has a good foundation in transfer pricing internal control and risk management.
• If you answer “no” to any of the questions, it is recommended that you consider strengthening management in the corresponding areas:
• For question 18, consider setting up a dedicated transfer pricing management position or team.
• Regarding question 19, a regular transfer pricing training program should be developed, and consideration may be given to combining internal training with external expert training.
• Regarding question 20, a systematic mechanism for collecting and updating related-party transaction information should be established, and consideration can be given to using information technology to improve efficiency.

If you answer “no” to all the questions, your company may have significant deficiencies in internal control and risk management over transfer pricing. It is recommended that you take steps to strengthen management in this area as soon as possible.

Please note that effective internal control and risk management are key to reducing transfer pricing risks. Even if your company is currently small, it is recommended to gradually establish and improve relevant mechanisms to lay the foundation for future development. At the same time, you can consider seeking assistance from external professional consultants to make up for the lack of internal resources.

Tax Compliance and Communications

This section of questions is designed to assess your company’s transfer pricing tax compliance performance and the state of your relationship with the tax authorities. A good compliance record and effective communication can significantly reduce transfer pricing risks.

21. Does your company submit the annual related-party transaction declaration form on time?

□ Yes □ No

Note: Submitting the related-party transaction declaration form on time is a basic compliance requirement. If you select “Yes”, it means that your company has performed well in basic compliance. Filing on time can not only avoid penalties, but also send a positive compliance signal to the tax authorities.

22. Has your company ever been questioned or investigated by the tax authorities due to transfer pricing issues?

□ Yes □ No

Note: If you select “Yes”, it means that your company’s transfer pricing practices have attracted the attention of the tax authorities. This may mean that there are potential risks and an in-depth review and necessary adjustments are required. At the same time, it is also an opportunity to learn and improve.

23. Does your company maintain good communication with the tax authorities?

□ Yes □ No

Note: Maintaining good communication with the tax authorities can help companies better understand and comply with regulatory requirements, and also help to more effectively resolve problems when they arise. If you select “Yes”, it means that your company has good practices in this regard.

Assessment Guidelines:

• If you answered “yes” to question 21, “no” to question 22, and “yes” to question 23, this is the ideal situation and indicates that your company is performing well in transfer pricing tax compliance and communication.
• If you answered “no” to question 21, this is a serious compliance issue. It is recommended that you take immediate action to file a late return and put in place a mechanism to ensure timely filing in the future.
• If you answered “yes” to question 22, you do not need to worry too much, but you need to take it seriously. It is recommended that you review past inquiries or investigations in detail, learn lessons, and consider seeking professional help to improve your transfer pricing practices.
• If you answered “no” to question 23, it is recommended that you take steps to improve your relationship with the tax authorities. You may consider proactively communicating with the tax authorities, attending relevant training or seminars, or even seeking an appointment to discuss transfer pricing issues.

Additional Tips:

• Maintain detailed records of all communications with tax authorities, including minutes of meetings, correspondence, etc.
• Establish internal mechanisms to ensure timely responses to inquiries and requests from tax authorities.
• Consider conducting regular transfer pricing health checks to proactively identify and address potential issues.
• If you are investigated, ensure that corrective actions are implemented and that these improvements are reflected in subsequent reporting and documentation.

Remember, good tax compliance and effective communication not only reduce risk, but also create a more favorable operating environment for your business. Continuously working to maintain good tax relationships is a wise long-term strategy.

Special Circumstances

These questions are designed to assess whether your company is involved in any special transfer pricing situations that may require additional attention and expertise.

24. Is your company involved in major corporate restructuring or business model changes?

□ Yes □ No

Note: Corporate restructuring or changes in business models may significantly affect the company’s functions, risks and profit distribution, thereby triggering transfer pricing risks. If you select “Yes”, it means that your company needs to pay special attention to the transfer pricing impact during the restructuring process.

25. Does your company have any special arrangements related to the group’s global value chain (such as cost sharing agreements)?

□ Yes □ No

Note: Special arrangements such as cost sharing agreements often involve complex transfer pricing issues that require detailed documentation and professional handling. If you select “Yes”, it means your company faces more complex transfer pricing challenges.

26. Has your company considered applying for an Advance Pricing Arrangement (APA)?

□ Yes □ No

Note: Advance Pricing Arrangement (APA) is an effective transfer pricing risk management tool, especially for large or complex related-party transactions. If you select “Yes”, it means that your company is actively considering advanced transfer pricing risk management methods.

Assessment Guidelines:

1. If you answered “yes” to question 24, please:

• Document in detail the business rationale and specific process for the reorganization or change.
• Assess the impact of restructuring on company functionality, risk and profitability.
• Update transfer pricing policies and documentation to reflect these changes.
• Consider engaging professional advisors to assist in managing transfer pricing risks associated with restructuring.

2. If you answered “yes” to question 25, please:

• Make sure there is a detailed written agreement and supporting documentation.
• Regularly review the implementation and rationality of special arrangements.
• Consider preparing special transfer pricing documentation for special arrangements.
• Closely monitor changes in relevant countries’ regulatory attitudes toward such arrangements.

3. If you answered “yes” to question 26, please:

• Assess the feasibility and necessity of APA.
• Understand the APA application process and required materials.
• Consider a pre-application interview to get a feel for the tax authorities.
• Weigh the costs and benefits of APA and make a decision that is right for your company.

If you answer “no” to all questions, it means that your company does not currently have these special circumstances, but it is recommended that you continue to pay attention to possible changes brought about by the development of the company and consider these more complex transfer pricing arrangements and risk management tools when necessary.

Please note that these special situations often involve complex transfer pricing issues that may require professional support. It is recommended that you consider seeking the assistance of experienced transfer pricing experts when dealing with these situations to ensure compliance and effectively manage risks.

Evaluation and Improvement

This section of questions is designed to understand your company’s ability to continuously improve transfer pricing risk management. Regular self-assessment and effective risk response are essential to maintaining good transfer pricing practices in the long term.

27. Does your company conduct transfer pricing risk self-assessment regularly?

□ Yes □ No

Explanation: Regular self-assessment can help companies identify potential transfer pricing risks in a timely manner and take preventive measures before problems become serious. If you select “Yes”, it means that your company has taken a proactive attitude towards transfer pricing risk management.

28. Does your company have a clear plan to address the identified transfer pricing risks?

□ Yes □ No

Note: It is not enough to identify risks, effective risk management also requires the development and implementation of clear solutions. If you select “Yes”, it means that your company not only focuses on risk identification, but also attaches importance to the actual solution of risks.

Assessment Guidelines:

If you answered “yes” to both questions, this indicates that your company has good practices in transfer pricing risk management. This continuous improvement approach can effectively reduce long-term risks.

1. If you answered “yes” to question 27 but “no” to question 28, please:

• Establish a systematic process to translate identified risks into concrete action plans.
• Assign an owner and a timeline for resolution for each identified risk.
• Regularly review risk resolution progress to ensure plans are effectively implemented.

2. If you answered “No” to question 27 but “Yes” to question 28, please:

• Establish a regular transfer pricing risk assessment mechanism, which can be quarterly or semi-annual.
• Consider using a standardized assessment tool or checklist to ensure comprehensiveness and consistency of assessments.
• Integrate risk assessment results with existing mitigation plans to ensure all important risks are addressed.

3. If you answer “no” to both questions, it indicates that your company may have significant deficiencies in transfer pricing risk management. Suggestions:

• Start conducting a comprehensive transfer pricing risk assessment now.
• Based on the assessment results, develop a detailed risk response plan.
• Establish mechanisms for regular evaluation and plan updates.
• Consider seeking assistance from external experts to establish an effective risk management system.

Additional Tips:

• Integrate transfer pricing risk assessment into the company’s overall risk management framework.
• Encourage cross-departmental collaboration to ensure that finance, tax, legal and business departments participate together in risk assessment and management.
• Maintain a continuous focus on transfer pricing regulations and practices, and promptly incorporate new requirements or trends into the assessment scope.
• Regularly share assessment results and improvement plans with senior management to ensure necessary support and resources.

Remember, transfer pricing risk management is an ongoing process. Through regular assessment and proactive response, your company can continuously improve the quality of its transfer pricing practices, reduce potential risks, and lay a solid foundation for the company’s sustainable development.

Conclusion:

This questionnaire is designed to help your company conduct a preliminary assessment of transfer pricing risk. By answering these questions, you have gained a basic understanding of your company’s transfer pricing practices. Now, let’s summarize the significance of this assessment and the next steps.

If you answer “no” or “unsure” to multiple questions, this may indicate that your company has potential transfer pricing risks. These risks may involve many aspects, including but not limited to:

• Identification and management of related-party transactions
• Transfer pricing policy formulation and implementation
• Document preparation and compliance reporting
• Internal control and risk management mechanisms
• Communication and relationship management with tax authorities

In the face of these potential risks, we strongly recommend that you take the following actions:

• Further review: For questions answered with “no” or “not sure”, an in-depth internal review is conducted. This may involve a detailed review of relevant documents, processes, and practices.
• Develop an improvement plan: Based on the review results, develop a specific improvement plan. Prioritize high-risk areas and set clear timelines and responsible persons.
• Seek professional advice: Consider consulting a transfer pricing expert or tax advisor. They can provide professional advice to help you more accurately assess risks and develop effective solutions.
• Raise internal awareness: Share assessment results with relevant departments and personnel to increase awareness of the importance of transfer pricing across the organization.
• Ongoing monitoring: Establish a regular assessment mechanism to ensure that transfer pricing practices continue to comply with Vietnamese regulatory requirements and best practices.
• Stay updated: Pay close attention to changes in Vietnam’s transfer pricing regulations and promptly adjust your company practices to comply with new requirements.

Remember, transfer pricing compliance is an ongoing process, not a one-time exercise. Through proactive risk management, your company can significantly reduce potential transfer pricing risks and ensure compliance and sustainability of business operations.

Finally, we emphasize again that this questionnaire is only a preliminary self-assessment tool and cannot replace a professional transfer pricing review. If you have any concerns about your company’s transfer pricing practices, we strongly recommend that you seek professional transfer pricing services to ensure full compliance and effectively manage risks.

I wish your company success in transfer pricing management and lay a solid foundation for the long-term development of the enterprise.