The Effectiveness of Multilateral Approaches to International Tax Cooperation: The Case of Vietnam and the OECD Transfer Pricing Guidelines
The Effectiveness of Multilateral Approaches to International Tax Cooperation:
The Case of Vietnam and the OECD Transfer Pricing Guidelines
Edwin Vanderbruggen
 
ABSTRACT: The effectiveness of multilateral non-binding recommendations in international tax cooperation has often been highlighted, particularly in connection with the Organization for Economic Cooperation and Development (‘OECD’). This article examines how Vietnam, a non-OECD member, has adopted the OECD’s non-binding Transfer Pricing Guidelines (‘TPG’) into its domestic policies by exploring major areas of alignment and divergence. The analysis focuses on general transfer pricing rules and principles and revisions made pursuant to the Base Erosion Profit Shifting (BEPS) Actions 8, 9, 10 and 13. The analysis allows the conclusion that the OECD soft law on transfer pricing, in general, has been remarkably effective in relation to Vietnam, although major differences remain. Specifically, with respect to the BEPS-related actions, Vietnam did not adopt several important measures. The case study of Vietnam’s adoption of the OECD TPG, pre- and post-BEPS, indicates that the effectiveness of multilateral soft law in taxation can be significant and is mainly based on the merits in terms of the substance of the recommendations. However, it also has limits. The effectiveness may be constrained by considerations based on the balance of taxing power between developed and developing states and, even more so, by divergence in local needs and resources.

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