• HOME
  • News
  • Legal News
  • Required Documents and Other Considerations for Technology Transfer Agreements

Legal News

Required Documents and Other Considerations for Technology Transfer Agreements


Technology transfer refers to a transaction in which a party that owns technology transfers ownership or the right to use that technology to a third party. The main objects of technology transfer are technical know-how, technical processes, computer software, data information, production rationalization solutions, technological innovations, and machinery and equipment related to these items. Since these are mainly intangible assets, it is difficult to specifically ascertain their form and value, which is why tax bureaus and other competent authorities strictly examine their contents.
Companies need to pay attention to both legal and practical aspects and prepare the following required documents to ensure that technology transfer expenses are considered deductible for CIT purposes, but many foreign companies have been found to have incomplete documents during tax audits and other inspections. In this newsletter, we will reiterate the required documents and other points to keep in mind.

<Required Documents>
① Technology Transfer Agreement
The details of the technology transfer must be described in detail. In particular, the details of the technology to be transferred, the timing of the transfer, and the method of calculating the transfer price should be clearly described.
② Certificate of registration of technology transfer in accordance with regulations
Contracts occurring on or after July 1, 2018 must be registered with the Ministry of Science and Technology in order to apply for a certificate of registration of transfer; the registration period is 90 days from the date of signing the contract; for contracts occurring before July 1, 2018, a new registration shall be made upon renewal.
③ Technology transfer price calculation sheet, invoices and invoices
④ Documents for payment of technology transfer costs by the bank
⑤ Other documents:

– Reporting documents on the progress of technology transfer (documents describing the work, implementer, etc.)
– Other documents: Documents to determine the appropriateness of the technology transfer price, such as market research documents on transfer pricing compared to similar companies.
– Documents that prove that technology transfer pricing decisions between the two parties are consistently applied in accordance with common policies among group companies (e.g., similar technology transfer agreements concluded between group companies or financial regulations of the parent company containing technology transfer pricing)
Although the documents in the above items are not clearly stipulated in the law, they are the documents that many tax audits require Vietnamese companies to submit. In particular, the Tax Department checks when the technology transfer price is unreasonably high compared to the market price.

<Other points to note>
(1) The Technology Transfer Law of 2017 clearly stipulates that technology transfer prices transferred between related parties must be subject to a price audit upon request of the Tax Department. This audit is conducted through a technology valuation. On the other hand, it is not clear when the Tax Administration requires an audit.
In practice, none of our clients have been requested to undergo an audit by the Tax Administration. In our opinion, the reason why the audit was not required is that the company had prepared all the documents listed in ① through ⑤ above.
(2) Technology transfer costs from foreign countries to Vietnam are subject to foreign contractor tax declaration and payment. The corporate income tax rate is 10% and no VAT is charged (no VAT is imposed on technology transfer). Enterprises are required to declare and pay the foreign contractor tax within 10 days from the date of payment of technology transfer costs. In addition, if there is a foreign contractor seconded to Vietnam to perform practical work in connection with technology transfer in Vietnam, personal income tax is due on the salary and related expenses while the seconded contractor is in Vietnam.
(3) If all the above documents are not in Vietnamese, such as Japanese or English, they need to be translated into Vietnamese and kept with the originals with the company seal affixed in preparation for inspection and audit by the Tax Department.
The above are the required documents and other points to be noted regarding technology transfer contracts. Companies are required to check the documents for each contract again, and if there are any deficiencies, they are required to add or prepare additional documents.

Reference Laws and Regulations
– Law on Technology Transfer 2017
– Decree 76/2018/ND-CP (on the Law on Technology Transfer 2017)
– Circular 78/2014/TT-BTC on Corporate Tax
– Decree 132/2020/ND-CP on related transactions
– Circular 103/2014/TT-BTC on Foreign Contractor Tax