Ms. Dinh Mai Hanh, Tax Partner and National Transfer Pricing Leader, Deloitte Vietnam

With extensive experience advising numerous multinational groups, particularly FDI enterprises, in an interview granted to our reporter, Ms Dinh Mai Hanh, Tax Partner and National Transfer Pricing Leader, Deloitte Vietnam, shares practical insights on the impacts and expectations of this new mechanism.

The delegation of authority to the Ministry of Finance to approve the contents of bilateral and multilateral APAs under Decree 122/2025/ND-CP is expected to shorten processing time for APA application. How do you assess the practical impact of this mechanism on business, especially FDI enterprises?

Decree 122 grants full authority to the Minister of Finance to approve APA negotiation strategies, decide the effective dates, and sign APA agreement, without submitting to the Government or the Prime Minister for approval as previously, is a breakthrough reform in tax administrative procedures.

Under the new mechanism, the Tax Department now plays a central coordinating role, from initial discussions, developing negotiation strategies, and consulting relevant parties if necessary, to conducting direct negotiations with taxpayers and foreign tax authorities. Given the consolidation of authority under the Ministry of Finance, this not only shortens the processing time of APA applications but also facilitates smoother bilateral and multilateral negotiations with foreign tax authorities.

For FDI enterprises, which currently account for the majority of APA applications, this reform brings significant benefits. Reducing the layer of the approval process shortens handling time, increases proactivity in negotiations, and accelerates towards the APA conclusion. The mechanism also helps strengthen multinational corporations’ confidence in Vietnam’s commitment to improving the investment environment while promoting transparency in tax policies.

In summary, this is a notable advancement that reflects the Government’s strong commitment to tax reforms while delivering practical value to the business community, particularly FDI enterprises.

From Deloitte’s perspective as a professional tax advisor, the Ministry of Finance’s direct authority to approve APA content, instead of requiring higher-level approval, will bring which advantages to the APA negotiation process with foreign tax authorities?

In my opinion, granting full authority to the Ministry of Finance to approve and sign APA agreement is a groundbreaking change, both technically and practically. In bilateral and multilateral APA negotiation, proactiveness and timely decision-making are key factors to ensure success. When the negotiating party (the Tax Department) and the decision-making party (the Ministry of Finance) can coordinate directly and efficiently with each another, the communication process with foreign tax authorities becomes much more flexible, especially in situations where prompt responses are needed to maintain negotiation momentum.

Furthermore, from a technical viewpoint, APA is a mechanism that requires in-depth expertise in the nature of related party transactions, transfer pricing methods, and the specific business context of each enterprise. Having a highly technical specialized authority as the Ministry of Finance make direct decisions shall ensure technical consistency and alignment with policy direction throughout the negotiation process with foreign partners.

Compared with international practices, it can be said that Vietnam is getting closer to the method which APA dossiers are being handled in developed countries. In Korea, the National Tax Service (NTS) is the agency with full authority to process and approve APA filings. In Japan, the National Tax Agency (NTA) directly negotiates and signs APA filings without submitting it to the Government’s approval. In Indonesia, the Directorate General of Taxes proactively proactively make decision on APA after internal appraisal process. Inland Revenue Authority of Singapore (IRAS) also have full authority to process APA filings.

In the long run, this new decentralization mechanism will help increase Vietnam’s credibility and trust with foreign tax authorities. Enterprises, especially multinational corporations, will also directly benefit from shortening negotiation time, minimizing double taxation risks and increasing stability in global tax compliance. This change is not only significant in terms of technical viewpoint but also a step forward in external relations and investment attraction strategy, clearly demonstrating Vietnam’s commitment to integrating with international practices and improving cross-border tax administration.

How will APA applications submitted before July 1, 2025 be processed?

According to Article 9 of Decree 122, bilateral and multilateral APA applications submitted before July 1, 2025, but not yet submitted to the Government or the Prime Minister for approval, will be directly reviewed, approved, and concluded by the Ministry of Finance.

This transitional regulation ensures consistency across the processing mechanism for pending applications, preventing procedural disruptions due to regulatory changes; at the same time, it speeds up processing times to create more favorable conditions for stakeholders, especially in negotiation situations that require timely feedback from the Vietnamese side.

Do you have any advice for businesses preparing APA application during this transitional period?

The issuance of Decree 122 marks a significant step forward, enhancing the APA process in Vietnam. In this context, businesses should proactively develop or reassess their APA preparation plans and early discuss with tax authorities to clearly define objectives, the scope under APA application, and align on the transfer pricing method.

For bilateral or multilateral APAs, it is crucial to invest seriously in functional analysis, clearly identify the covered transactions, and thoroughly prepare appropriate supporting documentation as required by foreign tax authorities. A well-structured, logical, and consistent application will help shorten negotiation timelines and increase the likelihood of reaching an agreement.

Simultaneously, enterprises should stay updated on policy developments and maintain regular, transparent communication with tax authorities to fully leverage the new mechanism’s flexibility and maintain a clear strategic direction during negotiation.

Finally, it’s highly recommended to consult with experienced APA specialists to ensure applications fully meet technical requirements and align with the expectations of both Vietnamese and foreign tax authorities. This will significantly improve the chances of success and help businesses achieve long-term tax certainty.

Thank you for your valuable and practical insights!