Official Dispatch 271/TCT-TTKT introducing new contents of Decree 132/2020/ND-CP on tax administration for enterprises with associated transactions

Dear: Tax Departments of provinces and centrally run cities

On November 5, 11, the Government signed and promulgated Decree No. 2020/132/ND-CP stipulating tax administration for enterprises with associated transactions (replacing Decree No. 2020/20/ND-CP). CP dated February 2017, 24 and Decree No. 02/2017/ND-CP amending and supplementing Clause 68, Article 2020 of Decree No. 3/8/ND-CP), effective from December 20, 2017. 20 and apply from the corporate income tax period 12.

The General Department of Taxation introduces new contents of Decree No. 132/2020/ND-CP, asking Tax Departments to urgently propagate, disseminate and notify tax officials and taxpayers in their respective areas.

(Details of specific content according to the attached Appendix)

In the course of implementation, if there are difficulties or problems, the Tax Departments are requested to promptly summarize and report them to the General Department of Taxation for study and settlement.

APPENDIX

INTRODUCING SOME CONTENT OF DECREE NO. 132/2020/ND-CP DATE NOVEMBER 05, 11 DETAILED SOME ARTICLES OF THE LAW ON TAX MANAGEMENT
(Attached to Official Dispatch No. 271/TCT-TTKT dated January 27, 01 of the General Department of Taxation)

1. Decree No. 132/2020/ND-CP does not have a guiding circular like Decree No. 20/2017/ND-CP:

Decree No. 132/2020/ND-CP detailing the principles, methods and order of determining the factors forming the price of related-party transactions; rights and obligations of taxpayers in determining transfer pricing, declaration procedures; responsibilities of state agencies in tax administration for taxpayers having related transactions. The Ministry of Finance has not issued a Circular guiding Decree No. 132/2020/ND-CP.

2. Regarding wording:

a) Adding the terms "Agreement of competent authorities" and "International agreement on taxation" "Organization to submit report on behalf of"

Specifically, Clause 2, Clause 3, Clause 10, Article 4 of Decree No. 132/2020/ND-CP stipulates:

"2. “Agreement of Competent Authorities” is a shortened term of an Agreement in force between competent authorities of countries and territories that are parties to an International Tax Treaty and have require automatic exchange of information 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.”

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 International Profit Report to the Tax Authority.

b) Amending and supplementing regulations on "database of tax authorities"

Before: Clause 7, Article 4 of Decree No. 20/2017/ND-CP stipulates:

“7. “Database of the Tax Authority” means the information and data built and managed by the Tax Authority in accordance with the provisions of the Law on Tax Administration related to the determination of the taxpayer's tax liability by the tax authority. Taxes collect, analyze, store, update and manage from various sources, including databases and exchange information with tax administrations and foreign authorities. ”

New point: Clause 7, Article 4 of Decree No. 132/2020/ND-CP stipulates:

“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 13 June 6, including the database and information exchanged with tax administration agencies, competent authorities abroad.”

c) Amending and supplementing regulations on standard independent transaction value ranges:

Before: Decree No. 20/2017/ND-CP and Circular No. 41/2017/TT-BTC stipulate: “Standard independent transaction value range” is the set of values ​​from the first quartile to the first quartile. Tuesday; The median of the standard independent trading range is the 3nd quartile price as a function of statistical probability.”

New point: Clause 9, Article 4 of Decree No. 132/2020/ND-CP stipulates:

“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.”

3. Amending and supplementing regulations on related parties:

a) Amendments and supplements to the provisions at point g) Clause 2 Article 5 The parties have an association relationship

Before: “g) Two enterprises are operated or controlled in terms of personnel, finance and business activities by individuals belonging to one of the relationships of husband, wife, biological father, adoptive father, natural mother, mother adopt, biological child, adopted child, biological brother, sister, brother-in-law, brother-in-law, brother-in-law, sister-in-law, sister-in-law, grandfather, grandmother, grandson, grandfather, grandmother, grandchild, aunt, uncle , uncle, aunt, uncle and nephew;”

New point: Point g, Clause 2, Article 5 of Decree No. 132/2020/ND-CP stipulates:

“g) Two enterprises are operated or controlled in terms of personnel, finance and business activities by individuals in one of the husband and wife relationships; natural parents, adoptive parents, stepfather, stepmother, parents-in-law, parents-in-law; natural, adopted, step-child of a spouse, daughter-in-law, son-in-law; brother, sister, half-brother, half-brother, half-brother, half-brother, brother-in-law, brother-in-law, sister-in-law, sister-in-law of the person of the same parent or half-brother, with a different mother; paternal grandparents, maternal grandparents; grandson, grandchild; aunt, uncle, uncle, aunt and nephew;”

b) Point 1, Clause 2, Article 5 is added to the related parties

“l) The enterprise has transactions of transferring or receiving at least 25% contributed capital of the enterprise in the tax period; Borrowing or lending at least 10% of the owner's contributed capital at the time of transaction in the tax period with an individual who operates or controls the business or with an individual who is in a relationship as prescribed in Clause XNUMX of this Article. point g of this clause.”

4. Inheriting Decree No. 68/2020/ND-CP stipulating amendments and supplements to Clause 3, Article 8 of Decree No. 20/2017/ND-CP stipulating deductible interest expenses and additional exclusions using regulations on limiting interest expenses for investment loans for programs and projects implementing the State's social welfare policy as social housing.

Specifically, Clause 3, Article 16 of Decree No. 132/2020/ND-CP stipulates:

“3. Total deductible interest expense 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) The taxpayer declares the interest expense ratio in the tax period according to Appendix I issued with this Decree.”

5. Amending and supplementing regulations on submission of inter-national profit reports:

Before: At Point c, Clause 4, Article 10 of Decree No. 20/2017/ND-CP stipulates:

“c) Report on the inter-national profit of the Supreme Parent Company according to Form No. 04 in the Appendix issued together with this Decree.

In case the taxpayer is the supreme parent company in Vietnam with global consolidated revenue in the tax period of eighteen trillion dong or more, it is responsible for making the Inter-national profit report at the Determination Profile. linked transaction prices according to Form No. 04 in the Appendix issued together with this Decree.

In case the taxpayer has the Supreme Parent Company in a foreign country, the taxpayer is responsible for providing a copy of the Interstate Profit Statement of the Supreme Parent Company in the case of the Supreme Parent Company of the taxpayer. must submit this report to the tax authority of the host country according to the declaration form of the tax authority of the host country or the declaration form according to the form No. 04/ND-GDLK in this Decree. In case the taxpayer is unable to provide an Interstate Profit Report, the taxpayer must provide a written explanation of the reasons and legal grounds and cite the specific legislation of the partner country for the failure allows taxpayers to provide Interstate Profit Reports.”

New point: Clause 5, Article 18 of Decree No. 132/2020/ND-CP stipulates:

“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) If the taxpayer has the Supreme Parent Company, it is 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. Supplementing regulations on responsibilities and powers of tax authorities in management of associated transaction prices

Supplement regulations on management and use of cross-country profit reports.

Specifically, at Point c, Clause 1, Article 20 of Decree No. 132/2020/ND-CP stipulates:

“c) Manage and use the inter-country profit report of taxpayers for risk management and information exchange in accordance with Vietnam's regulations and commitments in the International Agreement on Taxation, not used for tax purposes.”

7. Regulations on effect:

In Article 22 of Decree No. 132/2020/ND-CP stipulates:

"first. This Decree takes effect from December 1, 20 and applies from the corporate income tax period 12.

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) In case the taxpayer has a larger amount of corporate income tax and late payment interest paid to the state budget in 2017 and 2018 than the re-determined corporate income tax and late payment interest, the the difference is 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 that has not yet been fully offset will 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.