Conceptualizing the effects of corporate tax rate differentials on transfer pricing activities of FDI enterprises in Vietnam

The purpose of this paper is to evaluate the differentials effects of the tax rate on transfer pricing activities in foreign direct investment enterprises in Vietnam. The study then suggests further research on the determinants over transfer pricing activities of these enterprises to have better solutions in dealing with transfer mispricing in Vietnam. A quantitative research method involving self-administered closed-ended questionnaires were extended to Managing Directors/Chief Executive Officers, Tax Managers/ Directors, Chief Finance Officers or Heads of Finance from foreign direct investment enterprises in Vietnam. Findings indicate a strong relationship between corporate tax rate differentials and the transfer pricing activities in foreign direct investment enterprises in Vietnam. The findings support Vietnamese policymakers, academic researchers, auditors, investors to have further study on the effect of the tax rate on transfer pricing activities of the enterprises. Nevertheless, tax officials and accounting representatives can have in-depth knowledge with regards to transfer pricing activities which the outcome of this study aspires as guidance for better understanding the aspects of transfer pricing while doing business in Vietnam.