|Where issued:||Goverment||Effective date:||20/12/2020|
|Date issued:||05/11/2020||Status:||Still validated|
|GOVERMENT||SOCIAL REPUBLIC OF VIETNAM|
Independence - Freedom - Happiness
|Number: 132 / 2020 / ND-CP||Hanoi, date 05 month 11 year 2020|
REGULATIONS ON TAX MANAGEMENT FOR ENTERPRISES WITH LINKS TRANSACTIONS
Pursuant to the June 19, 6 Law on Government Organization; The Law amending and supplementing a number of articles of the Law on Government Organization and the Law on Organization of Local Government dated November 2015, 22;
Pursuant to the Law on Tax Administration dated June 13, 6;
Pursuant to the June 03, 6 Law on Corporate Income Tax; Law amending and supplementing a number of articles of the Law on Corporate Income Tax dated June 2008, 19;
Pursuant to the November 26, 11 Law amending and supplementing a number of articles of the Law on Taxation;
At the proposal of the Minister of Finance;
The Government issued a decree on tax administration for enterprises with associated transactions.
GENERAL RULES #
Article 1. Scope
1. This Decree prescribes the principles, methods and procedures for determining the factors forming the associated transaction price; rights and obligations of taxpayers in determining transfer pricing, declaration procedures; responsibilities of state agencies in tax administration for taxpayers having related transactions.
2. Affiliate transactions within the scope of this Decree are transactions of buying, selling, exchanging, renting, leasing, borrowing, lending, transferring, assigning goods and providing services; loans, loans, financial services, financial guarantees and other financial instruments; buy, sell, exchange, rent, lease, borrow, lend, transfer, transfer tangible assets, intangible assets and agree to buy, sell, use common resources such as assets, capital, labor activities, cost sharing among related parties, except for business transactions for goods and services subject to the State's price adjustment scope in accordance with the law on prices.
Article 2. Subject of application
1. Goods and service production and trading organizations (hereinafter referred to as taxpayers) are corporate income tax payers that have transactions with related parties as prescribed in Clause 5 of this Article. Article XNUMX of this Decree.
2. Tax authorities include General Department of Taxation, Department of Taxation and Sub-Department of Taxation.
3. Other state agencies, organizations and individuals involved in the application of regulations on tax administration to associated transactions.
Article 3. Principles apply
1. Taxpayers engaged in related-party transactions must exclude factors that reduce tax obligations influenced and influenced by the related-party relationship in order to declare and determine tax obligations for related-party transactions. independent transactions with the same conditions.
2. Tax authorities manage, examine and inspect the associated transaction prices of taxpayers according to the principle of independent transactions and the nature of operations and transactions, and determine the tax liability corresponding to the value created. arising from the nature of transactions, production and business activities of taxpayers, not recognizing associated transactions that do not follow the principle of independent transactions, which reduces the tax obligations of enterprises to the state budget and real currently adjust the associated transaction price in order to properly determine the tax liability specified in this Decree.
Article 4. Explain words
In addition to the terms explained in the Law on Tax Administration No. 38/2019/QH14 dated June 13, 6, the following terms are construed as follows:
1. “Tax Agreement” is a shortened term of the Agreement on the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income or property signed between Vietnam and other countries and regions. territory, including the Agreements and Protocols amending and supplementing the Agreements currently in force in Vietnam.
2. “Agreement of Competent Authorities” is a shortened term of Agreements in force between competent authorities of countries and territories that are parties to an international tax treaty. and there is an automatic communication requirement for the Interstate Profit Report.
3. "International agreement on tax", "International agreement on tax" means bilateral and multilateral international agreements and treaties in the field of taxation.
4. “Partner tax agency” means the tax authority of a country or territory that has signed a tax agreement with Vietnam.
5. “Independent comparables” means independent transactions between parties that do not have an affiliated relationship or an enterprise performing an independent transaction selected on the basis of analysis, comparison and identification of the subject matter. similar comparison to determine the price, profit rate, profit distribution ratio in order to determine the tax obligations payable to the state budget of taxpayers, ensuring compliance with the provisions of the Law on Tax Administration and the Law on Tax Administration. Corporate income tax.
6. “Material difference” means a difference in price-forming factors that have an important or significant effect on the price level, profit margin and profit distribution ratio of the parties to the transaction.
7. "Database of the Tax Authority" means information and data collected, built and managed by the Tax Authority from different sources as prescribed in the Law on Tax Administration No. 38/2019/QH14 dated June 13, 6, including the database and information exchanged with tax administration agencies and competent authorities abroad.
8. “Independent transaction value range” is a collection of values of the price level, profit rate or profit distribution ratio of independent comparables selected by the tax authority or the taxpayer. on the basis of the database specified in Article 17 of this Decree. Values belonging to this set have similar confidence levels. In case of necessity, apply statistical probability method to determine the range of standard independent transaction values and the representative, universal, and median values in order to increase the reliability of the set of transactions. independent comparator.
9. “Standard Independent Transaction Range” is the set of values from the 35th percentile to the 75th percentile; The median of the standard independent transaction range is the 50th percentile according to the statistical probability function.
10. “Report filing organization” is the term used to refer to the organization authorized by the Supreme Parent Company of the group to submit the Group's Inter-National Profit Report to the Tax Authority.
Article 5. The parties have links
1. Associated parties (hereinafter referred to as "associated party") are related parties in one of the following cases:
a) A party participates directly or indirectly in the administration, control, capital contribution or investment in the other party;
b) The parties are directly or indirectly under the control, control, capital contribution or investment of another party.
2. The associated parties in Clause 1 of this Article are specified as follows:
a) An enterprise directly or indirectly holds at least 25% of the capital contributed by the owner of the other enterprise;
b) Both enterprises have at least 25% of the owner's capital contributed directly or indirectly by a third party;
c) An enterprise is the largest shareholder in terms of the owner's equity and holds directly or indirectly at least 10% of the total shares of the other enterprise;
d) An enterprise borrows or lends to another business in any form (including loans from third parties guaranteed from the party's financial resources and financial transactions available). similar nature) provided that the loan amount is at least equal to 25% of the owner's equity of the borrowing enterprise and accounts for more than 50% of the total value of medium and long-term debts of the borrowing enterprise;
d) An enterprise appoints a member of the board of directors to manage or take control of another enterprise provided that the number of members appointed by the first enterprise accounts for more than 50% of the total members of the board of directors. operating or taking control of the second business; or a member designated by the first enterprise has the right to determine the financial or business operations of the second enterprise;
e) Two enterprises with more than 50% of members of the board of directors or a board member have the right to decide on the financial policies or business activities designated by a third party;
g) Two enterprises are operated or controlled by personnel, finance and business activities by individuals in one of the spousal relationships; biological parents, adoptive parents, stepfather, stepmother, mother-in-law, parents-in-law; natural children, adopted children, stepchildren of wife or husband, daughter-in-law, son-in-law; siblings, siblings of the same parent, sibling of the same parent, brother, sister, half sister, brother-in-law, brother-in-law, sister-in-law, sister-in-law of the same parent or the same parent, same mother of different father; paternal grandparents, maternal grandparents; grandchildren, grandchildren; aunt, uncle, uncle, uncle and nephew;
h) Two business establishments having a head office and a permanent establishment or a permanent establishment of a foreign organization or individual;
i) Enterprises are controlled by an individual through his / her capital contribution to that enterprise or directly participate in the management of the enterprise;
k) Other cases in which the enterprise is subject to the actual management, control and decision on the production and business activities of the other enterprise;
l) The enterprise has transactions to transfer or receive the transfer of contributed capital of at least 25% of the contributed capital of the owner of the enterprise in the tax period; to borrow or lend at least 10% of the owner's equity at the time of the transactions in the tax period with the operator or controller of an enterprise or with an individual in a relationship as prescribed in point g this clause.
ANALYSIS, COMPARISON, SELECTION OF INDEPENDENT COMPARISON OBJECTS AND METHODS OF DETERMINING LINK TRANSACTION PRICE #
Article 6. Principles of analysis and comparison
1. Analysis and comparison of related-party transactions performed according to the principle that the nature of operations and transactions determines tax obligations to determine the nature of related-party transactions:
a) The nature of the transaction is collated between the legal contract or the transaction document, agreement of the parties associated with the practice of the parties. In case the taxpayer arises a related transaction but there is no agreement in writing or the agreement is not consistent with the independent transaction principle or the actual implementation is not appropriate with the independent transaction principle between the parties without Linkage and associated transactions must be determined in accordance with the nature of business between independent parties, in particular: The affiliate receives revenues and profits from transactions associated with taxpayers must have the right of ownership owning and controlling business risks for assets, goods, services, resources, economic benefits and the rights to generate income from shares, stocks and other financial instruments and taxpayers incurred costs from dealing with affiliates must receive benefits, kin values directly or contributing to revenue generation and added value for taxpayers' production and business activities in accordance with independent transaction principles;
b) The nature of the transaction is determined by the method of collecting information, evidence and data on transactions and risks of associated parties in practical business and production activities.
2. Analysis and comparison of associated transactions with independent transactions:
a) The basis for comparing contracts, documents, agreements and economic, commercial and financial relations in related party transactions of taxpayers is data and actual transactions between related parties. results for comparison with business decisions that could be accepted by independent parties under similar conditions. The principle of comparison applied in analysis and comparison attaches importance to the nature and practice of business, the risks borne by related parties rather than written agreements;
b) Analysis and comparison must ensure the similarity between an enterprise performing an independent transaction and an enterprise having an associated transaction or an independent transaction with an associated transaction, without any significant difference in influence. weak to the price level; profit rate or profit distribution ratio between parties. In case there is a differentiating factor that materially affects the price level; profit ratio or profit distribution ratio, must analyze, determine and make adjustments to eliminate such material difference by comparing factors specified in Article 7, Article 10 of this Decree. and suitable to each method of determining transfer pricing as prescribed in Articles 13, 14 and 15 of this Decree.
Article 7. Selection of independent comparables
1. Selection of an independent internal comparison object is the selection of transactions by the taxpayer himself with a party that has no related relationship, ensuring the similarity, no difference, and materially affecting the price level; profit rate or profit distribution ratio between parties. In case there is no similar internal independent comparator, the comparison object shall be selected according to Points b and c, Clause 3, Article 17 of this Decree. The comparison between the associated transaction and the independent transaction is made on a transaction-by-transaction basis for each similar product. In case it is not possible to compare transactions by product, the grouping of transactions must be consistent with the nature and business practice and the application of the method of determining the price of related transactions shall comply with regulations. in Articles 12, 13, 14 and 15 of this Decree.
2. Financial and business data of comparable objects must be reliable to be used for tax declaration and calculation purposes, and in accordance with regulations on accounting, statistics and taxation. The time when transactions of independent comparables arise must be at the same time as the related transactions or have the same fiscal year as the taxpayer's fiscal year, except for special cases where it is necessary to extend the time limit for related parties. comparison period as prescribed in Article 9 of this Decree. The data format must ensure that the prices can be compared and calculated at the time of transaction or in the same tax period; Comparative data on profit margin or profit distribution ratio must cover at least three consecutive tax periods. For rate values, which are relative, taxpayers round the number to the second digit after the decimal point. In case the relative numbers are taken from the published data without the absolute number attached and this rounding principle is not used, the published data shall be taken with the source cited.
3. The minimum number of independent comparables selected after analyzing, comparing and adjusting for material differences is selected as follows: 01 subject in the case of associated transactions or the taxpayer performs associated transactions and independent comparables have no difference; 03 subjects in the case of independent comparables with differences but having enough information and data as a basis to exclude all material differences and 05 subjects in the case of only information and data basis for the elimination of most material differences between the independent comparables.
Article 8. Adjustment of tax rates, profit rates and profit distribution ratios of taxpayers
1. In case independent comparables can be found with similar reliability, no difference or difference, but there is enough information and data as a basis to exclude all key difference:
a) If the taxpayer's price, profit rate, and profit distribution ratio are within the range of independent transaction values of similar independent comparables, the taxpayer is not required to adjust the tax rate. price, profit rate, profit distribution ratio to determine the price of associated transactions;
b) If the taxpayer's price, profit ratio, and profit distribution ratio are not within the range of independent transaction values of similar independent comparables, the taxpayer must determine the value within the range of independent comparables. The independent transaction interval reflects the highest degree of similarity with the related transaction to adjust the price, profit margin, profit distribution ratio of the related transaction but does not reduce the taxable income. reduce the tax obligations payable to the state budget of taxpayers.
2. In case there is only data information as a basis for excluding most of the material differences of independent comparables, at least 05 independent comparables are selected and the transaction value range is applied. independent standards according to the guidance in Appendix V issued with this Decree. The selection of a value within the standard independent transaction value range to adjust and redefine the price, profit rate or profit distribution ratio of the taxpayer is as follows:
a) If the taxpayer's price, profit rate, and profit distribution ratio are values within the range of standard independent transaction values of similar independent comparables, the taxpayer is not required to adjust the price level, profit rate, profit distribution ratio to determine the associated transaction price;
b) In case the taxpayer's price, profit ratio, and profit distribution ratio are not within the standard range of independent transaction values of similar independent comparators, the taxpayer must determine the value in the standard independent transaction range that reflects the highest degree of similarity with the related transaction to adjust for the price, profit margin, profit distribution ratio of the related transaction, and determine taxable income , the tax payable but not reducing the taxable income, not reducing the tax obligation payable to the state budget;
c) In case the tax authority adjusts or fixes the price, profit rate or profit distribution ratio of the taxpayer, the adjusted or fixed value is the median value of the transaction value. Standard independent translation.
3. Based on the method of determining the associated transaction price and selected independent comparables, the price level adjustment shall be made; the profit ratio or profit distribution ratio of the taxpayer to determine the taxpayer's corporate income tax liability does not reduce the tax liability payable to the state budget.
Article 9. Expanding the scope of analysis and comparison
1. For related-party transactions of particular or unique nature, where independent comparables cannot be found, the scope of analysis and comparison shall be expanded in terms of industry, geographical market, and time. compare to search for independent comparison objects. The scope of analysis and comparison is expanded as follows:
a) Select independent comparators according to economic and statistical sub-sectors that have the highest similarity with the sub-sectors of taxpayers' activities in the same local market, locality, and domestic market;
b) Expand the comparison area to other countries in the region with similar industry conditions and economic development level.
2. In case of expanding the scope of analysis to select independent comparables in the above-mentioned areas, qualitative and quantitative similarity and material differences must be analyzed according to the provisions of Clause 6, Article 10. and Article 14 of this Decree or use data and data of independent comparables in the previous year and make adjustments for material differences due to time factors (if any).
The extended time for data collection and data collection of independent comparators shall not exceed one fiscal year compared with the taxpayer's fiscal year if the transfer pricing method specified in Article 14 is used. this Decree.
Article 10. Criteria for analysis, comparison and adjustment of material differences
1. Analysis, comparison, application of the method of comparison, review and adjustment of material differences to comparative factors in order to select independent comparables including product characteristics of goods and services. services, assets (hereinafter referred to as product characteristics); operational functions and assets, production and business risks; contractual and economic conditions when the transaction occurs.
2. Product characteristics are characteristics that affect the price of a product, including: tangible goods characteristics such as physical characteristics, product type, quality, product's commercial brand, and degree of quality. reliability, availability and supply volume; service characteristics such as nature, complexity, expertise and scope of services; characteristics of intangible assets such as form of transfer, type of property, form of ownership, term, degree of protection of ownership, time of transfer, rights to be transferred and benefits that can be obtained from the use of intangible assets.
a) Analysis of intangible assets and the ability to allocate profits to related parties not only based on legal ownership, but must consider all risk control activities and financial capacity to manage Risk management for the entire process of developing, increasing, maintaining, protecting and exploiting intangible assets between related parties. The analysis and comparison are based on some characteristics of intangible assets such as exclusivity; scope and duration of legal protection; rights established under protection titles, licenses and rights transfer documents of intangible assets; geographical coverage of intangible property rights; life cycle; development stage; rights to enhance, modify and update intangible assets; the expected return on the intangible asset;
b) Analysis of the characteristics of intangible assets, including contents of identifying intangible assets used or transferred in transactions and specific and economically important risks related to development, increase, maintaining, protecting and exploiting intangible assets; define contractual agreements such as legal title to intangible assets, terms and conditions of legal agreements, registrations, license agreements and related contracts, risks attach; identify the party performing the function of exploiting, using assets, managing risks related to the development, increase, maintenance, protection and exploitation of intangible assets; determine the terms agreed upon by the contract and the actual performance of the parties; determine the actual related-party transactions related to the development, enhancement, maintenance, protection and exploitation of intangible assets when considering the legal ownership of the intangible asset and its relationships, rights and interests. according to the relevant contract, the performance of the parties, and the determination of the price of the transaction in accordance with the contributions, performance functions, assets used and assumed risks of the parties.
3. Operational functions, assets and production and business risks performed by each party to the contract and production and business assets and risks in relation to opportunity costs, economic conditions, Taxpayers' industry conditions, areas of activity and geographic location are analyzed to identify factors that reflect the taxpayer's ability to profit from business activities and practices that taxpayers have engaged in. with the function and use of the assets, capital and associated costs.
The analytical results reflect the main function in the relationship between the use of assets, capital, opportunity costs as well as risks associated with the investment of assets, capital and costs with the ability to profit. profits that taxpayers make are related to business transactions, specifically:
a) Some key functions of the business are analyzed in the entire value chain of the corporation, including research and development such as performing R&D services under contract, autonomous research and development, technical technology development and product design; production includes autonomous production, licensed production, contract manufacturing, processing, assembly, and equipment installation; buying and selling, managing materials and other trading activities; distribution includes autonomous distribution, limited risk distribution, commission agency, wholesale distribution, retail distribution; providing support services such as legal, financial accounting, credit collection, training and personnel management; provide transportation and storage services; performing brand development such as marketing, advertising, promotion, market research and other functions in the industry value chain;
b) Some main assets of the enterprise include intangible assets such as technical know-how, copyright, business know-how, secret formulas, patents, intangible assets related to commercial activities. , marketing such as brands, branding and identity building systems, lists, metrics and customer relationships; tangible assets such as buildings, machinery and equipment; financial assets and economic interests and benefits from these assets in the course of exploitation, use and transfer of assets;
c) Some key business risks include strategic risk or market risk resulting from the implementation of business strategies such as entering, expanding or maintaining markets; infrastructure risk or inventory risk; financial risks such as credit risk and bad debt, exchange rate risk; transaction risks such as price factors and payment terms in commercial transactions; product risk from design development, production to quality management and after-sales service; business risks from capital investments and the number of customers and force majeure risks.
Business risk analysis of taxpayers throughout the group's value chain to identify key risks to the entire value chain of the industry, the ability to control risk, such as making management decisions risks and handling when these risks occur, including: identifying key economic risks; assess the level of allocation and settlement of risks in legal contracts or documents and agreements of taxpayers; functional analysis of risk control and mitigation on legal contracts or documents, agreements; check and review the situation of implementation and incidence, risk allocation of taxpayers in practice. In case of differences in risk allocation in legal contracts or documents, agreements compared with practical implementation, based on the results of risk analysis, tax authorities shall reallocate risks and adjust the price, profit ratio, profit distribution ratio of taxpayers.
4. Contractual terms when performing transactions include a number of terms on volume, trading conditions or product distribution; payment terms, conditions and methods; conditions of warranty, replacement, upgrade, modification or modification of the product; conditions on business privileges and product distribution; a number of other economically influential conditions such as support services, quality control consulting, user manuals, advertising and promotional support.
a) Where the terms of the legal contract or the written agreement do not fully reflect the actual practice between the related parties, the analysis and comparison is made on the basis of reviewing the actual facts. economic or financial data to determine the characteristics, economic nature and actual business risks of the parties;
b) In case the affiliated parties do not sign a legal contract or document or agreement, no revenue or expenses such as technical support, group synergy, business know-how sharing or use of If the staff is seconded or part-time, the analysis is conducted to determine the nature of the transaction, the transaction value, the income generated from these transactions and the contribution of each related party. On that basis, compare with business decisions that can be accepted by independent parties under similar conditions to redefine related transactions of taxpayers.
5. The economic conditions of the transaction and the conditions of the market at the time of the transaction have an influence on the price, profit rate and profit distribution ratio of the parties.
a) Some economic conditions when the transaction takes place, such as the size and geographical location of the product production and consumption market, the market level such as wholesale, normal retail, exclusive distribution; the degree of competition of the product in the market and the respective competitive position of the seller and the buyer; availability of substitute goods; the level of supply and demand in the market in general and each specific region; consumer purchasing power; economic factors affecting production and business costs incurred at the place of transaction such as tax incentives; market regulation policies of governments; production costs, land, labor and capital costs; business cycle and factors that have a positive impact on the taxpayer's price level, profit margin, and profit distribution ratio such as location characteristics, advantages and cost savings based on on geographical factors, local markets, workforce and concentration of functions synergies and specialization based on the contributions of all stakeholders involved in value creation;
b) Where taxpayers and comparables do not reside in the same country or territory or do not provide goods and services in the same geographical market, the analysis of economic conditions includes analysis of the similarity of markets in which taxpayers and comparators reside for comparative advantage, location rents that affect competitive factors such as labor costs, raw material costs, and so on. materials, transportation, land rent, training costs, subsidies, financial incentives, taxes, infrastructure costs, market growth, and market advantages such as the number of population, customers with good growth spending ability and other characteristics of comparative advantage.
6. Analysis, comparison, exclusion of material differences means analysis to eliminate qualitative and quantitative differences in financial information or data that have a material influence on the underlying factors. The basis for determining the transfer pricing price according to each transfer pricing method specified in Articles 13, 14 and 15 of this Decree. Quantitative difference is the difference determined in absolute numbers in terms of business cycle, number of years of establishment, operation of enterprises or relative numbers such as differences in financial indicators according to characteristics of investment industry or function. operational capacity, difference in working capital; Qualitative difference is the information determined on the basis of each transfer pricing method specified in Articles 13, 14 and 15 of this Decree.
a) Differentiating factors that are determined to be material include: Differences in product characteristics, contract conditions, functions, assets and risks and business lines and economic conditions of the submitters taxes and independent comparables; differences in policies, investment environment, impact of input costs on production and business in local, domestic and foreign locations;
b) Quantitative and qualitative differences must be reviewed and adjusted corresponding to the comparative factors that have a material influence on the method of determining transfer pricing specified in Articles 13, 14 and Article 15 XNUMX of this Decree.
7. Analysis and comparison results are the basis for selecting independent comparables suitable for each method of determining transfer pricing as prescribed in Articles 13, 14 and 15 of this Decree. In case the taxpayer fails to adjust the price, profit ratio, profit distribution ratio according to independent comparator due to the reason that qualitative and quantitative differences have material influence, Taxpayers must search and re-select independent comparables to determine the standard independent transaction value range to ensure the level of reliability and homogeneity and make adjustments to related-party transaction prices according to regulations. in this Decree.
Article 11. Order of analysis and comparison
1. Determine the nature of related transactions before conducting similarity analysis with independent comparables.
2. Analyze, compare, search and select similar independent comparables on the basis of determining the comparison time, product characteristics, and contract conditions; analysis of industry, market and economic conditions when transactions arise; analysis of associated transactions and taxpayers performing related transactions; database source; method of determining associated transaction price and adjusting for material differences, specifically:
a) Determining the scope, content and comparability factors including comparison time; analytical information on taxpayers with respect to comparable factors in terms of functions, assets, and risks; product characteristics; Contract conditions; economic conditions when the transaction occurs, analyze the industry, market, business operations, transactions of goods, services and assets of the parties in order to select the related party that needs to determine the transaction price. linked translation as prescribed in this Decree;
b) Evaluation and search for comparables includes prioritizing the review of independent internal comparables on the basis of verifying the reliability and independence of these objects to ensure that they are not transactions. settlement not according to the principle of independent transactions; develop search criteria and identify reliable database sources that can be used as prescribed in Article 17 of this Decree to conduct the search for similar independent comparables. On the basis of the analyzed information and review the availability of data of the independent comparator, select the method of determining the associated transaction price suitable to the nature of business and commercial activities. , finance, risks of the related party needing to determine the price;
c) Analyze the similarity and reliability of independent comparison objects selected on the basis of reviewing and screening qualitative and quantitative criteria; analyze economic, industry and financial data of selected subjects to verify similarity; identify material differences and correct them. On the basis of the results of selecting similar independent comparables, using data and financial data of the selected independent comparables to determine the basis for making adjustments to the price, exchange rate and price. profit rate, profit distribution ratio of taxpayers as prescribed in Article 8 of this Decree.
3. Determine the price, profit rate or profit distribution ratio based on the analysis results of independent comparables to serve as a basis for comparison and application of determining corporate income tax obligations. payment of taxpayers, does not reduce tax obligations payable to the state budget. The calculation method must be applied uniformly in the production and business cycle and stage in accordance with the functions and business models as prescribed in Articles 12, 13, 14 and 15 of this Decree.
Article 12. Selection of transfer pricing method
The method of comparing and determining the price of related-party transactions (abbreviated as the method of determining the price of related-party transactions) is applied in accordance with the principle of independent transactions, the nature of transactions and the functions of taxpayers on basis for calculation and uniform application in the entire production and business cycle and stage; based on financial data of independent comparables selected according to the principles of analysis and comparison specified in Articles 6, 7, Article 8, Article 9, Article 10 of this Decree. The method of determining the associated transaction price is selected from the methods specified in Articles 13, 14 and 15 of this Decree, based on the characteristics of the related party transaction and on available data. Yes.
Article 13. Method of comparing associated transaction prices with independent transaction prices
1. Cases of application of the method of comparing associated transaction prices with independent transaction prices (hereinafter referred to as independent transaction price comparison method)
Taxpayers perform associated transactions for each category of goods, tangible assets, and services subject to common trading conditions or circulation on the market or whose prices are announced on exchanges. domestic and international goods and services; royalties payment transactions when exploiting intangible assets; payment of loan interest in borrowing and lending activities; or taxpayers perform both independent transactions and related transactions for products that are similar in terms of product characteristics and contract conditions.
2. Principles of application:
a) The method of comparing independent transaction prices is carried out on the principle that there is no difference in product characteristics and contract conditions when comparing independent transaction prices and associated transaction prices that have a material influence. to product prices. Where there are differences that materially affect the price of the product, these material differences must be eliminated;
b) Product characteristics and contract conditions that have a material impact on product prices, including: characteristics, quality, brand, trade mark of the product and the size and volume of delivery. Translate; the contract conditions for the supply and delivery of products: Volume, delivery term, payment term and other conditions of the contract; the right to distribute and consume goods, services, assets that affect the economic value and the market in which the transaction takes place and other factors that affect the price of the product such as economic conditions and operational functions. taxpayer action.
3. Determination method:
a) The product price in the associated transaction is adjusted according to the product price in the independent transaction or the value within the standard independent transaction value range of independent comparables as prescribed in this Decree;
b) In case the product price is announced on the domestic and international goods and service exchanges, the product price in the associated transaction is determined according to the product price announced from time to time and the terms and conditions of the related transaction. similar transactions;
c) Taxpayers purchasing machinery and equipment from overseas affiliates must have documents and proofs that the purchase price of machinery and equipment complies with the principle of independent transactions at the time of purchase: new machinery and equipment, the comparative price is the invoice price of the associated party purchasing such machinery and equipment from the independent party; for used machinery and equipment, there must be original invoices and documents at the time of purchase, then the asset value will be re-determined according to current regulations of law on management and use guidance. use and depreciation of fixed assets.
4. The result of the transfer pricing determination is the taxable price for declaring and determining the payable enterprise income tax amount, but it does not reduce the taxpayer's tax liability to the state budget.
Article 14. Methods of comparing taxpayers' profit rates with those of independent comparables
1. Cases of application:
Taxpayers do not have the database and information to apply the independent transaction price comparison method specified in Article 13 of this Decree, or taxpayers cannot compare transactions by product on a transaction-by-transaction basis. For each similar product, the pooling of transactions is carried out in order to ensure conformity with the nature and business practices and to select the profit rate of suitable independent comparators or users. The taxpayer fails to perform the autonomous function for the entire chain of production and business activities or does not participate in the performance of related-party transactions as prescribed in Article 15 of this Decree, specifically:
a) The method of comparing the ratio of gross profit to sales (resale price method) is applied in case the taxpayer sells or redistributes products purchased from the affiliate to independent customers. establish and do not create intangible assets associated with the products sold; does not participate in the process of developing, increasing, maintaining and protecting the intangible assets owned by the associated party attached to the products sold or does not perform processing, processing or assembly to change its properties, product characteristics, affixing trade marks to increase product value. The resale price method does not apply to taxpayers who are distributors who own valuable corporate intangibles for brands, trademarks, and other marketing-related intangibles such as: list of customers, distribution channels, logos, images and brand identity elements in market research, marketing, trade promotion activities or incurring costs to create and design distribution channels. distribution, brand identity or after-sales costs;
b) The method of comparing the ratio of gross profit to cost of capital (cost plus interest method) is applied in case taxpayers do not own intangible assets and bear little business risks, perform the following functions: contract manufacturing, purchase orders or processing, assembly, fabrication, product processing, equipment installation; purchasing and supplying products; provide services or perform contract research and development to an associated party. The cost-plus-interest method does not apply to taxpayers who are autonomous manufacturing enterprises, performing product research and development functions to branding, trademarks, market strategies and warranties. products, customer care;
c) Method of comparing net profit margin: The method of comparing net profit ratio is applicable in case taxpayers do not have information to apply the method of comparing independent transaction prices; There is no data and information on the accounting methods of independent comparables or no comparables with similar functions and products, so there is not enough basis to apply comparable methods. compare the ratio of gross profit on sales or on cost of goods; taxpayers performing distribution or production functions do not own intangible assets or participate in the development, enhancement, maintenance, protection and exploitation of intangible assets, or do not fall under the method of profit distribution among affiliated parties as prescribed in Clause 1, Article 15 of this Decree.
2. Principles of application:
a) The method of comparing profit ratios is applied on the principle that there is no difference in operational functions, assets and risks; economic conditions and accounting methods when comparing between taxpayers and independent comparator have a material influence on profit ratio. Where there are differences that materially affect profit margins, then these material differences must be eliminated;
Factors that have a material impact on profit margin, including: Elements of assets, capital, costs; the right to control, the right to decide in fact serving the performance of the main function of the taxpayer; nature of business activities and product production and consumption markets; accounting methods and cost structure of products; economic conditions where the transaction takes place; the commercial or financial relationships of the multinational corporation; technical assistance; share business know-how; the use of seconded or part-time personnel and the economic conditions of the industry, the taxpayer's business field, product characteristics and contract conditions.
b) In case of applying the resale price method: The difference can have a material effect on the ratio of gross profit to selling price (net sales) as expenses reflect the function of the business as an agent. sales, exclusive distributors or marketing distributors; the level of growth and development of the product consumption market; the function of the taxpayer in the supply chain such as retail, wholesale and the accounting method of the parties;
c) In case the cost-plus-interest method is applied: The difference may have a material effect on the gross profit to cost ratio, including expenses that reflect the operating functions of the enterprise such as contract manufacturing. appointment from the parent company or an intra-group service provider; contract performance obligations such as product delivery deadlines, costs for quality control, storage, payment terms and accounting methods for the constituent elements of the taxpayer's cost of goods and independent comparables;
d) In case the net profit ratio comparison method is applied: The difference may have a material effect on the net profit margin, such as differences in operating functions, assets, and risks; economic conditions; contract conditions and product characteristics as prescribed in Article 10 of this Decree.
Taxpayers do business with simple production and distribution functions, no strategic decision function and low value-added transactions, no inventory risk, market risk and If they do not generate revenue or expenses from the exploitation of intangible assets, they will not bear the loss incurred in production and business activities from these risks.
3. Determination method:
The margin comparison method uses the gross profit margin or net profit margin of selected independent comparators to determine the respective gross margin or net profit margin of the submitter. tax. The choice of profit margin including gross profit margin or net profit margin on sales, expenses or assets depends on the nature and economic conditions of the transaction, the function of the taxpayer. and accounting methods of the parties. The basis for determining the profit ratio is the taxpayer's accounting data on revenue, expenses or assets that are not controlled or decided by the related parties.
a) Method of comparing gross profit to sales ratio (resale price method):
The purchase price of goods, services, assets (cost price) from the associated party is equal to (=) the selling price (net revenue) of goods, services and assets resold to the independent party minus (- ) gross profit on the selling price (net revenue) of taxpayers minus (-) some other expenses included in the purchase price: Import tax; customs fees; insurance and international shipping costs (if any).
Gross profit on the selling price (net revenue) of taxpayers is determined from independent comparison objects equal to (=) the selling price (net revenue) of taxpayers multiplying (x) the rate of profit Gross profit on the selling price (net revenue) of independent comparison objects is selected.
The gross profit to selling price (net sales) ratio of the selected independent comparables is the value within the standard independent trading range of the gross profit to selling price (net sales) ratio. of independent comparables selected for adjustment in accordance with the principles specified in this Decree.
The purchase price from the related party (or the cost price) adjusted according to the independent comparator is the taxable price and the declared expense, in order to determine the taxpayer's payable corporate income tax liability.
b) Comparative method of gross profit on cost of goods (cost plus interest method):
The selling price (or net revenue) of goods, services or assets sold to an affiliated party is determined by (=) the cost price of goods, services or assets purchased from the independent party plus (+) ) gross profit above cost of taxpayers.
Gross profit on taxpayer 's cost price is determined from independent comparison objects equal to (=) the taxpayer' s cost price multiplied by (x) the gross profit ratio on the cost of the comparison subjects. Setup is selected.
The gross profit to cost ratio of the selected independent comparables is the value within the standard independent trading range of the gross profit to cost ratio of the independent comparables selected for the purpose of analysis. adjusted in accordance with the principles specified in this Decree.
The selling price to an associate (or net revenue) adjusted for an independent comparator is the taxable price and the declared expense to determine the taxpayer's payable corporate income tax liability.
c) Method of comparing net profit margin:
The ratio of net profit not yet deducted from interest expenses and corporate income tax on revenue, expenses or assets of taxpayers performing related transactions shall be adjusted according to the net profit margin but not including interest expenses. borrowing on revenues, expenses or assets of independent comparison objects is selected, on that basis, to adjust and determine tax obligations of taxpayers.
Net profit does not include revenue difference and expenses of financial activities.
The selected net profit margin is the value within the standard independent transaction range of the net profit margin of the independent comparables selected to adjust and determine the taxable income and tax liability. of taxpayers in accordance with the principles specified in this Decree.
Indicators of net profit ratios, excluding interest and corporate income tax, are determined according to the law on accounting, tax administration and enterprise income tax.
4. The result of determining the adjusted profit ratio of the taxpayer is the basis for determining the taxable income and the payable enterprise income tax amount, but does not reduce the tax liability payable to the state budget of the taxpayer. taxpayers.
Article 15. Method of profit distribution among related parties
1. Cases of application:
a) Taxpayers participate in the implementation of associated transactions, which are integrated and self-contained within the corporation, activities of developing new products, using proprietary technology, participating in the transaction value chain. Group proprietary transactions or the development, enhancement, maintenance, protection and exploitation of proprietary intangible assets, without grounds for pricing between related parties or related transactions closely, concurrently execute, complex financial transactions involving many financial markets around the world;
b) Taxpayers participate in digital economic transactions, without grounds to determine prices between affiliated parties or participate in the creation of added value obtained from synergies within the group;
c) Taxpayers perform the function of autonomy over the entire production and business process and are not subject to the provisions of Clause 1, Article 13, Clause 1, Article 14 of this Decree.
2. Principles of application:
Profit allocation method is a method of allocating the total profit earned to determine the profit of taxpayers participating in the transaction chain. Profit allocation method is applied to: Total actual profit and potential profit determined by financial figures on the basis of reasonable and valid documents; The value and profit of the transaction must be determined using the same accounting method over the entire period of applying the profit amortization method.
3. Determination method:
The taxpayer's adjusted profit is allocated over the total profit earned, including the actual and potential profits of the parties to the transaction chain.
Taxpayer adjusted profit is the sum of base profit and excess profit. Basic profit is determined according to the method of comparing profit rates specified in Article 14 of this Decree. Extra profit is determined according to the allocation ratio based on one or several factors such as revenue, costs, assets or human resources of the related parties participating in the transaction and in accordance with the principle of independent transaction.
In case of insufficient information and data for profit distribution are adjusted according to the above provisions, the allocation may be based on one or several factors such as revenue, expenses, assets or human resources of the parties. link to join the transaction and conform to the independent trading principles.
4. Results of determination of adjusted profit of taxpayers are the basis for determination of taxable income and payable enterprise income tax amount, but do not reduce the taxpayer's tax liability to the state budget. tax.
TAX COST AND DECLARATION AND DETERMINATION OF LINK TRANSACTION PRICE #
Article 16. Determination of expenses for tax calculation for enterprises having associated transactions
1. Costs of related party transactions that are not suitable for the nature of independent transactions or do not contribute to the generation of revenue or income for taxpayers' production and business activities shall not be included in deductible expenses unless determination of income subject to corporate income tax in the period, including:
a) Expenses for payment to an associate who does not carry out any production or business activities related to the taxpayer's business lines, production and business activities; have no related rights and responsibilities with respect to the property, goods and services provided to the taxpayer;
b) Payment expenses for affiliated parties with production and business activities but the asset size, number of employees and production and business functions are not commensurate with the transaction value received by the affiliate. from taxpayers;
c) Expenses for payment to an associate who is a resident of a country or territory that does not collect corporate income tax, does not contribute to the generation of revenue or added value for production and business activities. of taxpayers.
2. Service charges between affiliated parties:
a) Except for the expenses specified at Point b of this Clause, the taxpayer is entitled to deduct service expenses from taxable expenses in the period if the following conditions are satisfied: The provided service is valid. commercial, financial, economic and directly serving production and business activities of taxpayers; services from identified affiliated parties provided under similar circumstances to which the independent parties paid for these services; Service fees are paid on the basis of the principle of independent transactions, and the method of calculating the associated transaction price or allocating service fees among the related parties must be uniformly applied throughout the group for this type of transaction. similar services and taxpayers must provide contracts, documents, invoices, and information on the group's calculation methods, allocation factors, and pricing policy for the service rendered.
In the case of related centers performing specialization functions and synergies of added value, taxpayers must determine the total value generated from these functions, determine the level of benefit distribution. The profit is consistent with the value of the associated parties after deducting (-) the corresponding service fee for the associated party to perform the function of coordinating and providing services of an independent transaction of similar nature. copper.
b) Service charges shall not be deducted when determining taxable income, including: Expenses arising from services provided only for the purpose of serving interests or creating value for other affiliated parties; service of shareholders' interests; duplication fee service provided by many parties for the same type of service, the value added for taxpayers cannot be determined; services are essentially the benefits that taxpayers receive as a member of a corporation and the costs associated with the affiliate for services provided by third parties through intermediaries are not closed. add value to the service.
3. Total deductible loan interest expenses when determining corporate income taxable income for enterprises having associated transactions:
a) Total interest expense after deducting deposit interest and loan interest arising in the period of the taxpayer, which is deductible when determining taxable income, does not exceed 30% of the total net profit from business activities. business activities in the period plus interest expense after deducting deposit interest and loan interest incurred in the period plus depreciation expense incurred in the period of the taxpayer;
b) The portion of interest expense that is not deductible as prescribed at Point a of this Clause is carried over to the next tax period when determining the total deductible interest expense in case the total deductible interest expense of the period is determined. subsequent tax calculation is lower than the rate specified at Point a of this Clause. The period of transferring interest expenses shall not exceed 05 years from the year following the year in which the interest expense is not deductible;
c) The provisions at point a of this clause do not apply to loans of taxpayers being credit institutions under the Law on Credit Institutions; organize insurance business under the Law on Insurance Business; official development assistance (ODA) loans and government concessional loans made by the Government's method of borrowing foreign loans for enterprises to re-loan; loans to implement the national target program (new rural program and sustainable poverty reduction); loans to invest in programs and projects implementing the State's social welfare policies (resettlement housing, worker and student housing, social housing and other public welfare projects);
d) Taxpayers declare the interest expense ratio in the tax period according to Appendix I issued with this Decree.
Article 17. Database used in the declaration, identification and management of associated transaction prices
1. Database used in declaration and determination of associated transaction prices of taxpayers, including:
a) Commercial database means financial and economic information and data collected, gathered, standardized, stored, updated and provided by supporting software by data trading organizations. access, manage with pre-programmed tools and applications, support utilities for users to search, access and use financial and economic data of businesses inside and outside Vietnam. According to business lines, geographical areas or other search criteria on request for the purpose of comparison, identification of similar objects in declaration and management of associated transaction prices;
b) Data information of enterprises published publicly on the stock market;
c) Information and data published on domestic and international goods and service trading floors;
d) Information published publicly by ministries, domestic agencies or other official sources.
2. The database used in the tax authority's associated transaction price management, including:
a) Database specified in Item 1 of this Article;
b) Information and data exchanged with the partner tax authorities as prescribed in Clause 7 Article 4 of this Decree;
c) Information provided by domestic agencies and ministries to tax authorities;
d) Database of tax authorities in risk management.
3. Analysis and selection of independent comparables to analyze and determine the range of independent transactions in compliance with the principles of analysis and comparison and methods of determining related-party transaction prices specified in this Decree. In order of preference, the comparison data is selected as follows:
a) Internal comparison objects of taxpayers;
b) Compare subjects residing in the same country or territory with taxpayers;
c) Subjects in regional countries with industry conditions and similar levels of economic development.
In case of selection of foreign comparison objects in other geographical markets, qualitative and quantitative similarity and material differences must be analyzed according to the provisions of Articles 9 and 10 of this Decree.
Article 18. Taxpayers' rights and obligations in declaring and determining affiliated transaction prices
1. Taxpayers whose related transactions fall within the scope of this Decree have the rights prescribed in the Law on Tax Administration No. 38/2019/QH14 dated June 13, 6.
2. Taxpayers whose related-party transactions fall within the scope of this Decree shall declare and determine the price of the related-party transactions without reducing the corporate income tax liability payable in Vietnam in accordance with regulations. provided for in this Decree.
Taxpayers are responsible for demonstrating the analysis, comparison and selection of transfer pricing methods according to the provisions of this Decree at the request of the competent authority.
3. Taxpayers whose related-party transactions are regulated by this Decree are responsible for declaring information on the related-party relationships and related-party transactions according to Appendix I, II and III promulgated. attached to this Decree and submitted together with the enterprise income tax finalization declaration.
4. Taxpayers are responsible for keeping and providing transfer pricing determination dossiers, which are information, documents, data and vouchers, including:
a) Information about the affiliate relationship and associated transaction according to Appendix I issued together with this Decree;
b) The national dossier is the information on the related party transaction, the policy and method of determining the price for the associated transaction, which is made and kept at the taxpayer's office according to the list of information contents, documents specified in Appendix II issued together with this Decree;
c) The global profile is information about the multinational corporation's business activities, its global associated transaction pricing policies and methods, and its income and distribution policies. activities and functions in the value chain of the group according to the list of information and documents specified in Appendix III to this Decree;
d) Report on the inter-national profit of the Supreme Parent Company as prescribed in Clause 5 of this Article and Appendix IV issued together with this Decree.
5. Taxpayers have obligations related to the Interstate Profit Report:
a) In case the taxpayer is the Supreme Parent Company in Vietnam with global consolidated revenue in the tax period of VND 12 trillion or more, it is responsible for preparing the Inter-country Profit Report in the application file. determine the associated transaction price according to Appendix IV issued with this Decree. The deadline for submitting the Report to the Tax Authority is XNUMX months after the end of the fiscal year of the Supreme Parent Company.
b) Taxpayers in Vietnam who have a supreme parent company in a foreign country whose supreme parent company is obliged to prepare an inter-country profit report according to the regulations of the country of residence must submit it to the tax authority in the following cases: the following case:
– The country or territory where the Supreme Parent Company is a resident has an International Agreement on Taxation with Vietnam but no Agreement of the Competent Authority at the time of submission of the Report in accordance with regulations. specified at point a of this clause.
– The foreign country or territory where the Supreme Parent Company is a resident has an Agreement between the competent authorities and Vietnam but has suspended the automatic or non-automatic information exchange mechanism. issued to Vietnam Inter-national profit report of the corporation which is a resident of those foreign countries and territories.
– In case a multinational corporation has more than 01 taxpayer in Vietnam and the supreme parent company in a foreign country has a written notice appointing one of the taxpayers in Vietnam to submit the inter- national profit report. The designated taxpayer is obligated to submit an Interstate Profit Report to the Tax Authority. Taxpayers are obligated to submit a written notice of appointment of the Supreme Parent Company to the Tax Authority before or on the end of the fiscal year of the Taxpayer's Supreme Parent Company.
c) The provisions at point b of this clause do not apply in the case that the supreme parent company of the taxpayer in Vietnam appoints an organization to submit the inter-country profit report to the tax authority of the host country on behalf of the local tax authority. or on the date specified at Point a of this Clause and satisfy the following conditions:
– The country or territory where the organization submitting the report on behalf of the company is a resident has regulations that require the submission of an interstate profit report.
– The country or territory where the organization submitting the report on behalf of the organization is a resident has an Agreement between the competent authority and Vietnam which is a contracting party at the time of submission of the report as prescribed in Clause XNUMX of this Article. point a of this clause.
– The country or territory where the organization submitting the report on behalf of the organization is a resident has an Agreement between the competent authority and Vietnam, does not suspend the automatic information exchange mechanism and is able to provide information to the public. Vietnam Report on the international profits of a corporation that is a resident of that foreign country or territory.
– The reporting organization on behalf of the reporting organization is designated to submit the Interstate Profit Statement to the Tax Authority of the country of residence on or before the end of the fiscal year of the Supreme Parent Company of the group. .
– The written notice of appointment of the reporting organization on behalf of the taxpayer provided by the taxpayer in Vietnam to the Vietnamese tax authority according to the provisions of point b of this clause.
– Taxpayers in Vietnam must notify in writing the Vietnamese tax authority of the name, tax code and country of residence of the Supreme Parent Company or the organization on behalf of which submits the report before or on the last day of the year. group finances.
d) In case the taxpayer has the supreme parent company in a foreign country and must submit the inter-country profit report according to the regulations of the country of residence, the tax authority shall exchange information automatically as committed in the Agreements. Vietnam's international tax agreement.
dd) In case taxpayers with the Supreme Parent Company are not required to submit the Inter-country Profit Report according to the regulations of the country of residence, the international tax treaty shall apply.
6. The transfer pricing determination dossier is made before the time of annual corporate income tax declaration and finalization and must be kept and presented at the request of the tax authority for information provision. When the tax authority conducts an inspection and examination of the taxpayer, the time limit for providing the transfer pricing determination dossier shall comply with the provisions of the Law on Inspection from the date of receipt of the request for information provision.
Dossier of determination of linked transaction prices and information and documents of taxpayers shall be provided to tax authorities in accordance with the provisions of tax administration law. The data, vouchers and documents used as a basis for analysis, comparison and determination of related-party transaction prices must clearly state their origin. In case the data of independent comparables is accounting data, the taxpayer is responsible for storing and providing it to the Tax Authority in a soft copy, in a spreadsheet format.
7. Taxpayers are responsible for providing complete and accurate information and taking responsibility before law for the information and documents in the transfer pricing determination dossier at the request of the tax authority during the process. submit to consultation before conducting inspection and examination according to the provisions of Article 20 of this Decree. The time limit for providing the transfer pricing determination dossier is not more than 30 working days after receiving the written request from the tax authority. If the taxpayer has a legitimate reason, the time limit for providing the transfer pricing determination dossier may be extended once, not exceeding 01 working days from the expiration date.
8. An independent audit or consulting company or a tax procedure company representing the taxpayer to make a transfer pricing determination dossier is responsible for complying with the tax administration law for enterprises have an association relationship specified in this Decree and take responsibility before law as prescribed.
Article 19. Cases where taxpayers are exempt from declaration and exemption from making dossiers on determination of associated transaction prices
1. Taxpayers are exempt from related transaction price determination declaration in Section III, Section IV, Appendix I to this Decree, and exempt from preparing transfer pricing determination dossiers according to the provisions of this Decree. in case transactions only arise with affiliated parties that are taxpayers of corporate income tax in Vietnam, the same corporate income tax rate as taxpayers and neither party is eligible for tax incentives. corporate income in the tax period, but must declare the grounds for exemption in Section I and II in Appendix I to this Decree.
2. Taxpayers shall have to declare and determine associated transaction prices according to Appendix I to this Decree, but are exempt from preparing transfer pricing determination dossiers in the following cases:
a) Taxpayers have associated transactions but the total revenue generated in the tax period is less than VND28 billion and the total value of all related transactions arising in the tax period is less than VND28 billion;
b) Taxpayers who have signed a prior agreement on the method of tax calculation price determination shall submit the annual report according to the law provisions on the prior agreement on the method of tax calculation price determination. Transfer transactions are not covered by the Prior Agreement on method of determining taxable prices, taxpayers shall declare and determine transfer pricing under Article 18 of this Decree;
c) Taxpayers conduct business with simple functions, do not incur no revenue or expenses from the exploitation and use of intangible assets, have turnover of less than VND 200 billion, apply the profit rate. Net interest expenses and corporate income tax (excluding difference of revenue and expenses from financial activities) on net revenue, including the following areas:
Distribution: From 5% or more;
Production: From 10% or more;
- Processing: From 15% or more.
In case the taxpayer tracks and accounts separately the revenue and expenses of each field, the net profit margin without loan interest expense and corporate income tax on net sales corresponding to each field will be applied. .
In case the taxpayer can separately track and record revenue but cannot track and separately account costs incurred in each sector in the production and business activities, the expense shall be distributed according to the proportion of turnover. revenue of each field to apply the net profit margin without interest expense and corporate income tax on net sales corresponding to each sector.
In case the taxpayer fails to separately track revenues and expenses of each production and business field to determine the net profit margin without loan interest expenses and comparable corporate income tax. For each field, the net profit margin without interest expense and corporate income tax on net revenue of the sector with the highest rate will be applied.
In cases where taxpayers do not apply the net profit rate prescribed in this point, they must make dossiers on determination of associated transaction prices according to regulations.
3. Taxpayers who are exempt from declaring and / or preparing transfer pricing determination dossiers as provided for in Clauses 1 and 2 of this Article, and the determination of total deductible interest expenses when determining collection Taxable income of the enterprise with associated transactions is specified in Clause 3, Article 16 of this Decree.
TERMS ENFORCEMENT #
Article 20. Responsibilities and powers of tax authorities in managing linked transaction prices
1. Apply risk management in tax administration to associated transaction prices in accordance with tax laws.
a) Manage and use information of taxpayers involved in related-party transactions for risk management;
b) Apply risk management in planning the inspection and examination of enterprises having associated relations and associated transactions;
c) Manage and use the taxpayer's inter-country profit report for risk management and information exchange in accordance with Vietnam's regulations and commitments in the International Agreement on Taxation. used for tax purposes.
2. Tax authorities shall base themselves on the principles of analysis, comparison, principles and methods of determining transfer pricing specified in this Decree and information on declaring tax obligations of enterprises having transactions. link to carry out tax assessment in the following cases:
a) Taxpayers violate tax laws but fully comply with accounting, invoice and document regimes: The determination of revenue, expenses or taxable income to determine tax obligations shall be made according to the provisions of law. principles of analysis and comparison, methods of determining transfer pricing prices and databases used in transfer pricing management are specified in this Decree;
b) Other cases specified in Clause 2, Article 50 of the Law on Tax Administration No. 38/2019/QH14 dated June 13, 6;
c) Tax authorities shall create conditions for taxpayers to prove and explain on data and data of independent comparison objects used in dossiers of determination of associated transaction prices.
3. Tax authorities have the right to fix prices; profit margin; profit allocation rate; taxable income or corporate income tax payable for taxpayers who fail to comply with regulations on declaration and identification of related-party transactions; failing to provide or providing incomplete information and declaration data to determine the associated transaction price in the following cases:
a) Taxpayers fail to declare or provide insufficient information or submit Appendix I to this Decree;
b) Taxpayers provide incomplete information on transfer pricing documentation specified in Appendix II and Appendix III to this Decree or fail to present inter-transaction price determination documents. results and data, vouchers and documents used as a basis for analysis, comparison and price determination in the transfer pricing determination dossier at the request of the tax authority within the time limit prescribed in This Decree. Information in the transfer pricing determination dossier is determined to be material if it affects the results of analysis and selection of similar independent comparables; the method of determining the transfer price or the result of the taxpayer's price level adjustment, profit rate or profit distribution ratio;
c) Taxpayers use untruthful or untruthful information about independent transactions to analyze, compare, declare and determine associated transaction prices or rely on documents, data and evidence. from the unlawful, invalid or unspecified origin to determine the price, rate of profit or distribution of profit applicable to the related transaction;
d) The taxpayer commits a violation of the transfer pricing regulations in Article 19 of this Decree;
dd) The database used for tax assessment shall comply with the provisions of the Law on Tax Administration No. 38/2019/QH14 dated June 13, 6.
4. Tax authorities are responsible for keeping confidential information provided by taxpayers related to the determination of associated transaction prices according to the provisions of this Decree. The provision of information to agencies and organizations shall comply with the provisions of Clause 5 of this Article.
5. In case through inspection, examination to determine the transfer price, there are problems with mechanisms and policies related to specialized industries and fields, the tax authority shall consult agencies and organizations. related organizations and individuals, specifically:
a) Specialized management agencies, specialized organizations and associations;
b) Tax offices shall supply dossiers, information and documents related to the determination of associated transaction prices to specialized agencies and organizations for comments. Consulted agencies and units shall keep information confidential according to law provisions.
6. Tax authorities exchange information with taxpayers and partner tax authorities according to the consultation procedures before, during and after the process of inspection and examination of related transaction prices as follows:
a) If, through the application of risk management in tax administration to related-party transaction prices, the tax authority considers it necessary to exchange information in advance with taxpayers on Appendix I issued with this Decree. and Taxpayer's associated transaction price determination dossier, the tax authority shall send an official dispatch requesting consultation with the taxpayer to exchange and provide information about the transfer pricing dossier in advance. results of taxpayers as prescribed in this Decree;
b) In case the tax authority needs to contact and exchange with the partner tax authority about the inter-country profit report and other relevant information, it must comply with the provisions of the Agreement on Agreement procedure. bilateral and exchange information in the relevant tax agreement. In case of necessity, the tax authority shall notify in writing the taxpayer of the temporary suspension of inspection and examination in order to exchange information with the partner tax authority in accordance with tax laws.
7. Tax authorities implement an automatic information exchange mechanism according to Vietnam's international commitments in international tax treaties. Periodically, annually, the tax authority shall notify the list of foreign tax authorities that are allowed to automatically exchange information for the inter-country profit report of taxpayers on the tax sector's web portal. .
8. Tax authorities shall adjust the transfer pricing determination according to bilateral agreements specified in relevant tax agreements.
9. In case the tax authority signs a pre-agreement on the method of determining the taxable price with the taxpayer, the tax authority is responsible for:
a) To manage, examine and inspect related-party transactions that are not within the scope of application of the Prior Agreement on the method of determining taxable prices according to the principles of risk management;
b) Manage, examine and inspect the taxpayers' compliance with the pre-agreement on the method of determining taxable prices as prescribed.
Article 21. Responsibilities of ministries, ministerial-level agencies and People's Committees of provinces and centrally-run cities
1. The Ministry of Finance, within the ambit of its tasks and powers, is responsible for:
a) Be responsible for performing the state management of taxes for enterprises having associated relations and associated transactions as prescribed in this Decree;
b) Assume the prime responsibility for, and coordinate with the Ministry of Information and Communications in, carrying out the work of information and propaganda on the state management of tax for enterprises having associated transactions;
c) Inspect and inspect the implementation of tax regulations for enterprises engaged in related-party transactions as prescribed in this Decree.
2. The State Bank shall, within the ambit of its duties and powers, have the following responsibilities:
Coordinate in providing information and data on foreign loans and repayments of each specific enterprise having associated transactions on the basis of a list requested by the tax authority, including data on loan turnover. , interest rate, interest payment period, principal payment, actual withdrawal, debt repayment (principal, interest) and other relevant information (if any).
3. The Ministry of Planning and Investment shall, within the ambit of its tasks and powers, have the following responsibilities:
Coordinating in providing business line registration data of enterprises; database on investment capital structure at the time of licensing and the times of adjustment and modification of investment registration certificates, business registration certificates and related information for projects investment when the tax authority conducts inspection and examination of enterprises having associated transactions.
4. The Ministry of Science and Technology and the Ministry of Agriculture and Rural Development shall, within the ambit of their tasks and powers, have the following responsibilities:
Coordinating the provision of databases related to technology transfer contracts; industrial property right transfer contract; transfer of rights to plant varieties; application for registration of intellectual property rights after industrial property rights and rights to plant varieties are established and information is provided upon consultation to the tax authority for tax administration on enterprises with associated transactions.
5. The Ministry of Information and Communications shall, within the ambit of its tasks and powers, have the responsibilities:
Coordinate to provide a database of businesses licensed in the field of management and information on associated transactions in the field of digital economy at the request of the Ministry of Finance.
6. The Ministry of Industry and Trade, within the ambit of its tasks and powers, is responsible for:
Coordinating in providing a database on transaction prices of goods on domestic commodity exchanges and information according to functions and tasks under the management of the Ministry of Industry and Trade, at the request of tax administration for with enterprises having associated transactions of tax authorities.
7. The Committee for Management of State Capital at Enterprises shall, within the ambit of its tasks and powers, have the following responsibilities:
Coordinate and urge corporations, corporations, and groups of affiliated enterprises under their management to provide information in accordance with regulations of the Tax Authority.
8. The People's Committees of the provinces and centrally-run cities shall, within the ambit of their tasks and powers, have the responsibilities:
Directing the Department of Planning and Investment, the Department of Finance and other departments, agencies and branches to build databases in the fields of specialized management in service of tax administration for enterprises having associated transactions.
9. Ministries and branches shall, within the ambit of their tasks and powers, coordinate with the Ministry of Finance in implementing this Decree.
Article 22. Enforcement
1. This Decree takes effect from December 20, 12 and applies from the corporate income tax period 2020.
2. Decree No. 20/2017/ND-CP dated February 24, 02 and Decree No. 2017/68/ND-CP dated June 2020, 24 of the Government stipulating tax administration for enterprises with transactions The linked translation shall cease to be effective from the effective date of this Decree.
3. Declaration and finalization of corporate income tax in 2017 and 2018:
a) Taxpayers subject to additional declarations for 2017 and 2018 CIT finalization declaration as prescribed in Clause 2 Article 2 of Decree No. 68/2020 / ND-CP dated June 24, 6 of the Government but not yet made additional declarations in the CIT finalization dossier, which will continue until January 2020, 01;
b) The taxpayer has been inspected and examined by a tax authority or a competent authority and has obtained the inspection conclusion, examination, and handling decision for the tax period 2017 and 2018. but in the case of re-determination of the payable tax amount under Point c, Clause 2, Article 2 of Decree No. 68/2020 / ND-CP dated June 24, 6, but until the effective date of this Decree, no proposal has been submitted. If it is proposed to the tax office, the taxpayer may request the supervisory tax office to re-determine the payable tax amount;
c) If the amount of corporate income tax or late payment interest paid to the state budget in 2017 or 2018 is larger than the amount of corporate income tax, late payment interest has been re-determined, the the difference shall be offset against the corporate income tax amount from 2020 to the end of 2024. At the end of the above time limit, the remaining tax amount not yet fully cleared shall not be handled.
4. For the case of transferring interest expenses to the next tax period upon finalization of corporate income tax in 2019 according to the provisions of Decree No. 68/2020 / ND-CP, the time for transferring interest expenses calculated continuously, not exceeding 05 years from the CIT period of 2020. In case after 05 years, the payment is not fully transferred, the remaining interest expense shall not be transferred to the next tax period.
Article 23. Responsible for implementing
1. The Ministry of Finance shall assume the prime responsibility for, and coordinate with concerned ministries and branches and the People's Committees of provinces and centrally run cities in, implementing this Decree.
2. The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the People's Committees of the provinces and centrally-run cities and relevant organizations and individuals shall be responsible for the implementation of this Decree. this decision.