Circular 95: A step towards facilitating the conclusion of APAs in Vietnam

On 01 July 2026, the Ministry of Finance (MoF) issued Circular No. 95/2026/TT-BTC (Circular 95) providing guidance on the implementation of agreements for the avoidance of double taxation (DTAs) between Vietnam and other jurisdictions, the mutual agreement procedure (MAP), and advance pricing agreements (APAs) for taxpayers with related-party transactions.

For the first time, the rules governing APAs, DTAs and MAP have been consolidated into a single legal framework, establishing a more unified and coherent framework for international tax administration that is more closely aligned with international standards and practice. This integrated approach is expected not only to promote greater consistency and certainty in the application of the relevant tax rules, but also to provide a clear and transparent legal basis for the administration and resolution of cross-border tax matters and related-party transaction issues.

With respect to the APA regime, Circular 95 largely builds upon and retains the existing framework under Circular No. 45/2021/TT-BTC and Decree No. 126/2020/ND-CP, while introducing a number of important substantive and procedural provisions aimed at further strengthening and refining the legal framework for APA administration in Vietnam.

Ms. Dinh Mai Hanh, Tax Partner, Deloitte Vietnam, noted that businesses, particularly multinational enterprise (MNE) groups with significant investments in Vietnam, are closely following and placing high expectations on Circular 95, particularly its potential to address the existing procedural and practical impediments in the APA process and facilitate the timely conclusion of APAs with the Vietnamese Tax authorities.

In your view, what are the key and noteworthy provisions introduced under the new APA guidance that may have a practical impact on the APA regime in Vietnam?

Circular 95 introduces a number of important provisions that are expected to have a positive impact on the practical implementation of the APA regime in Vietnam.

With respect to database, following the enactment of the Law on Tax Administration No. 108, Circular 95 abolishes the previous requirement for commercial databases to be “verified to ensure legal validity”; instead, commercial databases are recognised as one of the databases used in tax administration, including in the preparation and negotiation of APAs, which is more consistent with international guidance and the practices adopted in a number of jurisdictions. The change is expected to promote greater consistency between the database used by taxpayers and those relied upon by the Tax authorities in the preparation and negotiation of APAs.

From an international perspective, this development also reflects Vietnam’s continued alignment with APA practices in jurisdictions with more established APA programmes. Commercial databases are routinely used as a source of data for transfer pricing analysis and APA negotiations in countries such as Japan, Korea and Singapore, as well as in many other jurisdictions where international commercial databases have long been widely used in the administration of related-party transactions.

Regarding the APA application period and effective period, Circular 95 also provides greater clarity on the topic. Under the new rules, the proposed APA period may cover up to five tax years, while an APA may be effective for a maximum of three tax years, commencing from the tax year in which the APA is signed or the immediately following tax year, as agreed between the taxpayer and the Tax authorities. This framework provides taxpayers with greater flexibility to develop an APA implementation roadmap covering the proposed period and allows sufficient time for the review, analysis, negotiation and conclusion of the APA.

From an international perspective, an APA term of approximately five years is commonly adopted in many jurisdictions, including Japan, Korea, India, Singapore and Thailand. More importantly, a number of jurisdictions allow an APA to cover the entire proposed APA period, rather than limiting its application to tax years following the conclusion of the APA. Certain jurisdictions also provide for rollback mechanisms, under which the terms of an APA may, subject to prescribed conditions, be applied to prior tax years, for example Japan, Korea, China, Malaysia and Indonesia. Such mechanisms are not currently provided under the Vietnamese APA framework. Accordingly, an APA in Vietnam currently takes effect only for future tax years following the conclusion of the APA.

We also notice that Circular 95 has made other adjustments to be closer to international practices?

Regarding the APA application, Circular 95 further enhances the APA process by providing more detailed and transparent procedures covering pre-filing consultation, site visits during the review and analysis, negotiation and conclusion of the APA, to post-conclusion monitoring of APA compliance. In particular, Circular 95 introduces specific provisions on site visits to taxpayers’ premises during the review and analysis stage. This provides a formal basis for the Tax authorities to obtain a more comprehensive understanding of the taxpayer’s actual business operations, functions performed, assets employed and risks assumed before reaching a conclusion on the APA application. The Circular also provides greater clarity on circumstances in which the Tax authorities may discontinue the processing of an APA application prior to its conclusion. This is expected to enhance procedural transparency and provide taxpayers with greater certainty when preparing and managing their APA applications.

Internationally, pre-filing consultation is recommended or commonly adopted in jurisdictions such as Japan, Korea and Singapore. Such consultations enable taxpayers and Tax authorities to establish an early understanding of key aspects of the proposed APA, including the scope of the covered transactions, the proposed transfer pricing methodology and the readiness and completeness of the APA submission before the official application is filed.

Regarding procedures digitalisation, Circular 95 also promotes the digitalisation of APA procedures. Accordingly, the application for an APA (Form No. 01/APA-ĐN) and notifications of the outcome of APA application processing are to be submitted and issued through electronic means. Where the application or supporting documentation is extensive, requires specialised technical formats, or does not meet the technical requirements of the electronic system, taxpayers may submit the relevant documents in hard copy. This approach is expected to facilitate the submission and tracking of APA applications by taxpayers while supporting the broader modernisation and digital transformation of tax administration.

The digitalisation of APA procedures is also an emerging trend across a number of jurisdictions, where the submission, exchange of information and management of APA case files are increasingly integrated into electronic tax administration systems. Such digitalisation can enhance procedural transparency, reduce administrative burdens and improve the efficiency and timeliness of APA case processing.

Could you elaborate on the process under which the Department of Taxation (DT) takes the lead in handling APA applications under the new provisions of Circular 95?

The allocation of authority for handling APA applications under Circular 95 is one of the notable developments. The new framework builds on the delegation and decentralisation of APA case handling introduced under Decree No. 122/2025/ND-CP, effective from 01 July 2025, and is aligned with the restructured tax administration model under the Law on Tax Administration No. 108/QH15, effective from 01 July 2026.

Under the new framework, for bilateral and multilateral APAs, the DT takes the lead in receiving APA applications, conducting the review and analysis, and developing proposals for the negotiation, conclusion, amendment, extension, revocation or cancellation of APAs. For complex APA cases, particularly those involving multiple jurisdictions or matters falling within the remit of multiple government authorities, the DT is required to report to the MoF and seek its views on the proposed negotiation approach before entering into formal discussions and negotiations with the competent foreign authority.

For unilateral APAs, the DT is responsible for determining and assigning the relevant Tax authority units to receive, review, analyse and process APA applications in accordance with the applicable regulations.

From an international perspective, Vietnam’s approach is increasingly aligned with the APA administration models adopted in jurisdictions with more established APA programmes. In Korea, the National Tax Service (NTS) has primary authority over the administration and approval of APAs. In Japan, the National Tax Agency (NTA) directly conducts APA negotiations and concludes APAs without requiring approval from the government. Similarly, in Indonesia, the Directorate General of Taxes (DGT) has the authority to issue APA decisions following its internal review process, while Singapore’s Inland Revenue Authority of Singapore (IRAS) is responsible for administering and processing APA applications.

The clearer allocation of authority and greater standardisation of the APA process are expected to enhance administrative efficiency, improve the predictability of case handling and potentially reduce processing timelines, thereby supporting more effective implementation of the APA regime in Vietnam in the coming years.

Do you have any recommendation for businesses seeking to take advantage of the opportunities and assess the conditions for applying for an APA in Vietnam?

Circular 95 should not be viewed merely as a new set of procedural guidance on APAs. It also reflects Vietnam’s broader direction towards greater alignment with OECD principles and international practice in the administration of international taxation. With APAs, MAP and DTAs now addressed within a more integrated legal framework, businesses should consider shifting from a predominantly tax controversy-driven approach towards a more proactive approach to managing tax risks arising from cross-border transactions.

For MNE groups with recurring and material cross-border related-party transactions, an APA can provide more than tax certainty. It can help mitigate the risk of transfer pricing adjustments, reduce the potential for double taxation and provide a greater degree of certainty to support the groups’ long-term investment and business operations in Vietnam.

As the APA framework continues to develop and practical implementation is expected to gain momentum, businesses should proactively review their related-party transactions, assess the appropriateness of their existing transfer pricing policies and consider whether an APA may be suitable for material or strategically significant transactions. Early preparation of the APA application, including comparability analyses, financial projections and supporting documentation demonstrating compliance with the arm’s length principle, can enhance the quality and robustness of the submission and improve the taxpayer’s position in subsequent discussions and negotiations with the Tax authorities. Businesses should also consider assessing the feasibility of an APA at the tax and investment planning stage, rather than waiting until a tax audit, transfer pricing dispute or potential adjustment arises. Taking such a proactive approach would allow businesses to make more effective use of the reforms introduced under the new framework and strengthen long-term tax certainty for their cross-border operations in Vietnam.