Circular 41/2017/TT-BTC provides supplementary guidance on Decree 20/2017/ND-CP.

Based on the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006; and the Law amending and supplementing a number of articles of the Law on Tax Administration No. 21/2012/QH13 dated November 20, 2012;

Based on the Corporate Income Tax Law No. 14/2008/QH12 dated June 3, 2008; and the Law amending and supplementing a number of articles of the Corporate Income Tax Law No. 32/2013/QH13 dated June 19, 2013;

Based on the Law amending and supplementing a number of articles of the Laws on taxation No. 71/2014/QH13 dated November 26, 2014;

Based on Decree No. 12/2015/ND-CP dated February 12, 2015 of the Government detailing the implementation of the Law amending and supplementing a number of articles of the Laws on taxation and amending and supplementing a number of articles of the Decrees on taxation;

Based on Government Decree No. 20/2017/ND-CP dated February 24, 2011, regulating tax management for enterprises with related-party transactions;

Pursuant to the Decree No. 215 / 2013 / ND-CP dated 23 / 12 / 2013 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

THE FINANCIAL ---	SOCIAL REPUBLIC OF VIETNAM Independence - Freedom - Happiness -----
Number: 41 / 2017 / TT-BTC	Hanoi, date 28 month 04 year 2017

CIRCULARS

GUIDELINES FOR IMPLEMENTING CERTAIN PROVISIONS OF GOVERNMENT DECREE NO. 20/2017/ND-CP DATED FEBRUARY 24, 2017, REGULATING TAX MANAGEMENT FOR ENTERPRISES WITH RELATED PARTNERSHIP TRANSACTIONS

At the proposal of the General Director of Taxation,

The Minister of Finance provides guidance on the implementation of certain provisions of Government Decree No. 20/2017/ND-CP dated February 24, 2017, regulating tax management for enterprises with related-party transactions (hereinafter referred to as Decree No. 20/2017/ND-CP) as follows:

Article 1. Scope

This Circular provides guidance to the subjects of application of Decree No. 20/2017/ND-CP on the implementation of certain regulations regarding comparative analysis, selection of methods for determining transfer pricing, information declaration, preparation of transfer pricing documentation, and application of the exemption from preparing transfer pricing documentation as stipulated in Decree No. 20/2017/ND-CP.

Article 2. Comparative analysis, selection of independent comparable entities for comparison, and determination of transfer pricing in accordance with the provisions of Article 6 Decree No. 20 / 2017 / ND-CP

1. The nature of related-party transactions is determined by comparing the legal contract or written agreement of the related parties with the actual implementation by those parties, as stipulated in Clause 1, Article 6 of Decree No. 20/2017/ND-CP, and applied as follows:
2. a) Gather information and determine the nature of related-party transactions, economic, commercial, and financial relationships of the taxpayer in contracts (including contract appendices and amendments) or documents and agreements with related parties to determine the obligations, rights, and responsibilities of the contracting parties.
3. b) Analyze the practical aspects of production and business operations, and the functions of the taxpayer; compare the actual performance of the parties in the production and business process with the signed documents, agreements, and contracts; analyze the documents, contracts, agreements, and the practical implementation of the parties based on the principle of independent business conduct between parties. The comparative analysis shall be carried out according to the guidelines in Clause 3 of this Article.

In cases where the actual performance of related parties differs from the provisions in the contract, document, or agreement, the information collected regarding the actual performance of the parties serves as the basis for comparative analysis and selection of the method for determining the transfer pricing of related-party transactions by the taxpayer.

If the practices of related parties are inconsistent with the principles of independent business conduct, the arm's length principle and the principle of substance over form shall be applied to redefine related-party transactions and the business risks borne by the parties. In cases where related-party transactions and risk allocation do not accurately reflect the nature of the economic, financial, and commercial relationship between the independent parties, the related-party transactions and business risks shall be redistributed for comparative analysis and to determine the taxpayer's preferred pricing method.

1. c) The basis for comparing contracts, documents, agreements, and economic, commercial, and financial relationships in related-party transactions of the taxpayer is data and actual transaction execution between related parties to compare with business decisions that could be accepted by independent parties under similar conditions. The comparison principle applied in comparative analysis prioritizes the nature and practice of business and the risks borne by related parties over written agreements.
2. The standard independent transaction value range and the basis for adjusting the price, profit margin, and profit allocation ratio of taxpayers to determine corporate income tax obligations as stipulated in points c and d, clause 2, Article 6 of Decree No. 20/2017/ND-CP are determined as follows:
3. a) The statistical probability method applies the quartile function to determine the standard independent transaction value range and the value selected as a basis for comparison and adjustment of related-party transaction prices in cases where there is no information to assess the reliability of each independent comparable entity or no data available to eliminate all material differences. The quartile function is used to determine the standard independent transaction value range as a basis for making corresponding adjustments to the price, profit margin, and profit allocation ratio of taxpayers without reducing their tax obligations to the state budget. The quartile function divides the set of values, arranged from lowest to highest, of the price, profit margin, and profit allocation ratio of independent comparable entities into four parts with an equal number of observations. The formulas for calculating the quartile function, the standard independent transaction value range, and the median value are implemented according to the guidelines in Appendix 01 issued with this Circular.

The standard independent transaction range, defined by the quartile function, is from the first to the third quartile. The middle values ​​within the standard independent transaction range are those values ​​within the range from the first to the third quartile. The second quartile is the median of the standard independent transaction range.

1. b) The basis for adjusting the price, profit margin, and profit allocation ratio of the taxpayer to determine the transfer pricing, taxable income, and corporate income tax liability is applied as follows:

b1) In cases where independent comparable entities are found with equivalent levels of reliability, there are no differences, or there are differences but sufficient information and data are available to rule out all material differences:

If the price, profit margin, or profit allocation ratio of the taxpayer falls within the range of independent transaction values ​​of comparable independent entities, the taxpayer is not required to adjust the price, profit margin, or profit allocation ratio to determine the transfer pricing.

If the price, profit margin, or profit allocation ratio of the taxpayer does not fall within the independent transaction value range of comparable independent entities, the taxpayer must determine the value within the independent transaction range that reflects the highest degree of similarity with the related-party transaction to adjust the price, profit margin, and profit allocation ratio of the related-party transaction without reducing taxable income or the taxpayer's tax liability to the state budget.

b2) In cases where only data information is available as a basis for excluding most material differences of independent comparable entities, at least five independent comparable entities must be selected as prescribed in point c, clause 2, Article 6 of Decree No. 20/2017/ND-CP, and the standard independent transaction value range as guided in point a of this clause shall be applied.

If the price, profit margin, or profit allocation ratio of the taxpayer falls within the range of the standard independent transaction values ​​of comparable independent entities, the taxpayer is not required to adjust the price, profit margin, or profit allocation ratio to determine the transfer pricing.

In cases where the price, profit margin, or profit allocation ratio of the taxpayer does not fall within the standard independent transaction value range of comparable independent entities, the taxpayer must determine the value within the standard independent transaction range that reflects the highest degree of similarity with the related-party transaction to adjust the price, profit margin, and profit allocation ratio of the related-party transaction and determine taxable income and tax payable, but without reducing taxable income or tax obligations to the state budget.

In cases where the tax authorities adjust or determine the price, profit margin, or profit allocation ratio for taxpayers, the adjusted or determined value is the median value of the standard independent transaction value range.

3. The comparative factors for conducting the analysis and selecting independent comparable objects as stipulated in points a and d of Clause 3, Article 6 of Decree No. 20/2017/ND-CP are applied as follows:
4. a) The characteristics of assets, goods, and services (abbreviated as products) are the attributes that affect the price of the product, including: Tangible goods characteristics such as physical characteristics, product type, quality, trademark, reliability, availability, and supply volume; service characteristics such as nature, complexity, expertise, and scope of service; intangible asset characteristics such as form of transfer, type of asset, form of ownership, term, level of protection, transfer period, transfer rights, and potential benefits from using the intangible asset.

Analyzing intangible assets, their characteristics, and the potential for profit allocation among stakeholders should not only consider legal ownership but also all risk control activities and financial capacity to manage risks throughout the entire process of developing, increasing, maintaining, protecting, and exploiting intangible assets among related parties. Some characteristics of intangible assets include exclusivity; scope and duration of legal protection; rights established under protection certificates, licenses, and transfer agreements; geographical scope of intangible asset rights; life cycle; development stages; rights to enhance, modify, and update intangible assets; and the expected profit level of intangible assets.

Analysis of intangible asset characteristics includes identifying intangible assets used or transferred in transactions and the specific, material economic risks associated with the development, enhancement, maintenance, protection, and exploitation of intangible assets; identifying contractual agreements such as legal ownership of intangible assets, terms and conditions of legal agreements, registrations, licensing agreements, and related contracts, and associated risks; identifying the party performing the function of exploiting and using the asset, managing risks related to the development, enhancement, maintenance, protection, and exploitation of intangible assets; identifying contractual terms and the practical implementation by the parties; identifying actual related-party transactions related to the development, enhancement, maintenance, protection, and exploitation of intangible assets when considering the legal ownership of intangible assets and related contractual relationships, rights, and the implementation process of the parties. and determine the price of the transaction in accordance with the contributions, functions performed, assets used, and assumed risks of the parties.

1. b) The operational functions performed by each party to the contract and the assets and business risks in relation to opportunity costs, economic conditions, industry conditions, sector of operation, and geographical location of the taxpayer are analyzed to determine the factors reflecting the potential for profit from the activities and business practices undertaken by the taxpayer associated with the functions and use of related assets, capital, and costs.

The analysis results reflect the main function in the relationship between the use of different types of assets, capital, opportunity costs, and risks associated with investing those assets, capital, and costs, and the potential for profitability achieved by taxpayers related to business transactions, specifically:

b1) Some key functions of the enterprise analyzed throughout the group's value chain include research and development, such as contracted research and development services, independent research and development, technology development, and product design; production, including independent production, licensed production, contract production, processing, assembly, and equipment installation; purchasing and managing raw materials and other trading activities; distribution, including independent distribution, limited-risk distribution, commission agency, wholesale distribution, and retail distribution; providing support services such as legal services, financial accounting, credit collection, training, and human resource management; providing transportation and warehousing services; and brand development, such as marketing, advertising, promotion, market research, and other functions within the industry value chain.

b2) Some of the main assets of a business include intangible assets such as technical know-how, copyrights, business secrets, secret formulas, patents; intangible assets related to commercial and marketing activities such as brands, brand building and identity systems, customer lists, data and relationships; tangible assets such as factories, machinery, and equipment; financial assets and economic rights and benefits from these assets in the process of exploitation, use and transfer of assets.

b3) Some of the main business risks include strategic or market risks arising from implementing business strategies such as market entry, expansion, or maintenance; infrastructure risks or inventory risks; financial risks such as credit and bad debt risks, exchange rate risks; transaction risks such as price and payment terms in commercial transactions; product risks from design and development, production to quality management and after-sales service; business risks from capital investments and customer numbers; and force majeure risks.

The business risk analysis of taxpayers across the entire value chain aims to identify key risks to the entire industry value chain, the ability to control risks such as making risk management decisions and handling these risks when they actually occur, including: identifying key economic risks; assessing the level of risk allocation and settlement in legal contracts or agreements of the taxpayer; analyzing the risk control and mitigation functions in legal contracts or agreements; and reviewing the actual implementation, bearing, and allocation of risks by the taxpayer. In cases where there are differences in risk allocation between legal contracts or agreements and actual implementation, based on the risk analysis results, the Tax Authority will reallocate the risks and adjust the price, profit margin, and profit allocation ratio of the taxpayer.

1. c) Contractual terms when conducting transactions include several clauses regarding the quantity, conditions of the transaction or product distribution; the term, conditions and methods of payment; conditions for warranty, replacement, upgrade, modification or adjustment of the product; conditions regarding business privileges and product distribution; and other economically impactful conditions such as support services, quality control consulting, user instructions, advertising support, and promotions.

In cases where the terms of legal contracts or written agreements do not fully reflect the actual practices between the related parties, a comparative analysis is conducted based on a review of factual events or financial data to determine the characteristics, economic nature, and practical business risks of the parties.

In cases where related parties do not enter into legally binding contracts or written agreements to avoid recognizing revenue or expenses such as technical support, synergistic partnerships, sharing of business know-how, or the use of seconded or dual-role personnel, an analysis is conducted to determine the nature of the transaction, the value of the transaction, the income generated from these transactions, and the contribution of each related party. Based on this, a comparison is made with business decisions that could be accepted by independent parties under similar conditions to reassess the related-party transactions of the taxpayer.

1. d) The economic conditions of the transaction and the market conditions at the time of the transaction affect the price, the rate of profit, and the profit allocation ratio of the parties.

Several economic conditions influence a transaction, such as the size and geographical location of the production and consumption markets; market levels (wholesale, retail, or exclusive distribution); the level of competition for the product in the market and the respective competitive positions of the seller and buyer; the availability of substitute goods; the level of supply and demand in the market in general and in specific regions; consumer purchasing power; and economic factors affecting production and business costs at the transaction location, such as tax incentives; government market regulation policies; production costs, land costs, labor costs, and capital costs. The business cycle and factors that positively impact prices, profit margins, and taxpayer profit allocation ratios include locational characteristics, advantages, and cost savings based on geographical factors, local markets, the workforce, and the concentration of synergistic functions and specialization based on the contributions of all stakeholders involved in value creation.

In cases where the taxpayer and comparable entities do not reside in the same country or territory, or do not provide goods or services in the same geographical market, the economic conditions analysis includes analyzing the degree of similarity of the markets where the taxpayer and comparable entities reside with respect to comparative advantages and locational advantages affecting competitive factors such as labor costs, raw material costs, transportation costs, land rent, training costs, subsidies, financial and tax policy incentives, infrastructure costs, market growth rate, and advantageous market characteristics such as population size, customers with high spending power, and other comparative advantages.

d) Comparative analysis, excluding material differences based on quantitative and qualitative criteria, is used to identify and select independent comparable entities that are most similar to the taxpayer, as a basis for determining the taxpayer's price, profit margin, and profit allocation ratio according to the arm's length principle.

Some quantitative criteria include financial indicators such as revenue size, assets, working capital, inventory, and export share; intangible asset indicators such as intangible asset value, research and development costs; and other specific quantitative differences of taxpayers determined on the basis of comparative factor analysis as stipulated in Clause 3, Article 6 of Decree No. 20/2017/ND-CP and guided in points a, b, c, and d of this clause.

Qualitative and quantitative differences are analyzed and demonstrated to have a material impact on prices, profit margins, and profit allocation ratios when comparing the taxpayer with independent comparable entities during periods and business cycles consistent with the economic and commercial nature of the industry and the taxpayer's operational functions. These differences are analyzed to identify and select independent comparable entities that are similar to the taxpayer.

In cases where taxpayers fail to adjust prices, profit margins, and profit allocation ratios against independent comparable entities due to significant qualitative and quantitative differences, they must re-select independent comparable entities to determine the standard independent transaction value range that ensures the highest level of reliability and similarity, and adjust the transfer pricing in accordance with the guidance in Clause 2, Article 2 of this Circular.

4. The comparative analysis process includes the steps stipulated in Clause 4, Article 6 of Decree No. 20/2017/ND-CP, applied as follows:
5. a) Determine the nature of related-party transactions by gathering factual information on the taxpayer's actual transactions.
6. b) Comparative analysis, searching for and selecting independent, similar, and specific objects for comparison:

b1) Determine the scope, content, and comparative factors, including the comparison period; analytical information on taxpayers regarding comparative factors such as functions, assets, risks; product characteristics; contract conditions; economic conditions at the time of the transaction; analysis of the industry, market, business operating circumstances, and transactions of goods, services, and assets of the parties to select the related party for which transfer pricing needs to be determined in accordance with Article 7 of Decree No. 20/2017/ND-CP and Article 3 of this Circular.

b2) Evaluating and searching for comparable entities includes prioritizing the review of independent internal comparable entities based on verifying their reliability and independence, ensuring that these are not arranged transactions not in accordance with the arm's length principle; developing search criteria and identifying reliable database sources that can be used as stipulated in Article 9 of Decree No. 20/2017/ND-CP to conduct the search for similar independent comparable entities. Based on the information analyzed and the availability of data for independent comparable entities, select a pricing method appropriate to the nature of the business, trade, finance, and risks of the related party for which pricing needs to be determined.

b3) Analyze the degree of similarity and reliability of the selected independent comparable entities based on a review and screening of qualitative and quantitative criteria; analyze the economic, industry, and financial information of the selected entities to verify the degree of similarity; identify material differences and adjust material differences (if any). Based on the results of selecting similar independent comparable entities, use the financial data of the selected independent comparable entities to determine the basis for adjusting the price level, profit margin, and profit allocation ratio of the taxpayer as guided in point b, clause 2 of this Article.

1. c) Determining the price level, profit margin, and profit allocation ratio of the taxpayer based on the comparative analysis results to determine taxable income without reducing the taxpayer's tax liability to the state budget.

Article 3. Comparative methods for determining the price of related-party transactions as prescribed in Article 7 Decree No. 20 / 2017 / ND-CP

1. The following cases apply to the method of comparing the taxpayer's profit margin with the profit margin of independent comparable entities, as stipulated in point a, clause 2, Article 7 of Decree No. 20/2017/ND-CP:
2. a) The method of comparing gross profit margin on revenue (resale price method) applies in cases where the taxpayer sells or redistributes products purchased from related parties to independent customers and does not create intangible assets associated with the products sold; does not participate in the development, increase, maintenance, or protection of intangible assets owned by related parties associated with the products sold; or does not perform processing, assembly, or alteration of the product's characteristics or affix a trademark to increase its value. The resale price method does not apply to taxpayers who are distributors owning intangible assets of the corporation that are valuable to the brand, trademarks, and other marketing-related intangible assets such as customer lists, distribution channels, logos, images, and brand identity elements in market research, marketing, and trade promotion activities, or incurring costs for establishing and designing distribution channels, brand identity, or after-sales costs.
3. b) The comparative gross profit margin on cost of goods sold (cost-plus method) applies in cases where the taxpayer does not own intangible assets and bears little business risk, performing functions such as contract manufacturing, order fulfillment, or processing, assembly, manufacturing, product processing, equipment installation; product procurement and supply; service provision; or research and development under contract for affiliated parties. The cost-plus method does not apply to taxpayers who are self-manufacturing enterprises performing functions such as product research and development, brand building, trademark development, market strategy, product warranty, and customer service.
4. c) The net profit margin comparison method applies in cases where the taxpayer lacks the information to apply the independent transaction price comparison method; lacks data and information on the accounting methods of independent comparable entities; or cannot find comparable entities with similar functions and products, thus lacking sufficient basis to apply the gross profit margin comparison methods guided in points a and b of this clause; the taxpayer performs distribution or production functions, does not own intangible assets, or does not participate in the development, increase, maintenance, protection, and exploitation of intangible assets; or does not fall under the case of applying the profit allocation method among related parties as stipulated in point a, clause 3, Article 7 of Decree No. 20/2017/ND-CP.
5. Some key differences when choosing the method for comparing profit margins as stipulated in point b, clause 2, Article 7 of Decree No. 20/2017/ND-CP are as follows:
6. a) In the case of applying the resale price method: Several differences can significantly affect the gross profit margin on the selling price (net revenue), such as costs reflecting the business's function as a sales agent, exclusive distributor, or marketing distributor; the growth rate of the product market; the taxpayer's function in the supply chain such as retail or wholesale; and the accounting methods of the parties involved.
7. b) In the case of applying the cost-plus method: Several differences can materially affect the gross profit margin on cost of goods sold, including costs reflecting the business's operational functions such as contract manufacturing from the parent company or providing services within the group; contractual obligations such as product delivery deadlines, quality control costs, warehousing, payment terms, and accounting methods for the components of the cost of goods sold of the taxpayer and independent comparable entities.
8. c) In cases where the net profit margin comparison method is applied: Several differences may materially affect the net profit margin, such as differences in function, assets, risks; economic conditions; contract conditions and product characteristics as stipulated in Clause 3, Article 6, Clause 2, Article 7 of Decree No. 20/2017/ND-CP and guided in Clause 3, Article 2 of this Circular.
9. The method of determination as prescribed in points c, clauses 1, 2 and 3 of Article 7 of Decree No. 20/2017/ND-CP is applied as follows:
10. a) The price, profit margin, and profit allocation ratio of the taxpayer must be adjusted according to the corresponding price, profit margin, and profit allocation ratio of independent comparable entities selected from the comparative analysis results as guided in point b, clause 2, Article 2 of this Circular.
11. b) Cases where the net profit margin comparison method is applied:

b1) For taxpayers in manufacturing, trade, and service sectors: The net profit margin indicators are determined according to the regulations of the law on accounting, tax administration, and corporate income tax, which are the net profit margin before deducting interest expenses and corporate income tax on revenue (or net revenue); on expenses (or total expenses); and on assets (or total fixed assets) in accordance with the nature of the taxpayer's business activities.

Net profit, excluding the difference between revenue and expenses of financial activities, is used to determine the net profit margin based on data on revenue, expenses, assets not controlled by related parties, or related-party transactions that constitute revenue and expenses of the taxpayer and have been accounted for according to the arm's length principle.

In cases where financial indicators from the balance sheet are used for comparative analysis, quantitative screening, and determining net profit margin, the value used is the average of the year-end and beginning-of-year figures on the balance sheet for the indicators used.

b2) For taxpayers in the banking and credit sectors: The net profit margin indicators are determined according to the regulations of the law on accounting, tax administration, corporate income tax, and management of credit institution operations, in accordance with the type of business of the taxpayer.

b3) For taxpayers that are securities companies or securities investment fund management companies: The net profit margin indicators are determined according to the regulations of the law on accounting, tax administration, corporate income tax, and securities activity management appropriate to the type of business of the taxpayer.

1. c) The results of adjusting the price, profit margin, and profit allocation ratio of the taxpayer are the tax base, declared expenses, and revenue used to determine taxable income, and do not reduce the taxpayer's corporate income tax liability to the state budget.

In cases where taxpayers fail to adjust related-party transaction prices as stipulated in Decree No. 20/2017/ND-CP and this Circular, resulting in a shortfall in tax payable, they will be subject to penalties in accordance with tax laws.

Article 4. Declaration of related party relationships, related party transactions and preparation of related party transaction pricing documents as prescribed in Clause 8, Article 10 of Decree No. 20/2017/ND-CP

1. Taxpayers subject to Decree No. 20/2017/ND-CP shall declare using the forms prescribed in Decree No. 20/2017/ND-CP, replacing Form No. 03-7/TNDN issued with Circular No. 156/2013/TT-BTC dated November 6, 2013 of the Ministry of Finance, and submit them along with Corporate Income Tax Final Settlement Declaration No. 03/TNDN, as follows:
2. a) Form No. 01: Information on related party relationships and related party transactions, as detailed in Appendix 02 issued with this Circular.
3. b) Form No. 02: List of information and documents to be provided in the national file and Form No. 03: List of information and documents to be provided in the global file. Taxpayers should mark the corresponding lines for the information and documents already prepared in the Transfer Pricing Documentation.
4. c) Form No. 04 Declaration of Information on Country-by-Country Profit Report of the ultimate parent company in Vietnam with consolidated global revenue of 18 trillion VND or more operating in multiple countries and territories, as detailed in Appendix 03 issued with this Circular.

In cases where taxpayers submit supplementary declarations or discover errors in the information declared to the Tax Authority in Forms 01, 02, 03, and 04 under points a, b, and c of this section, they shall submit supplementary declarations in accordance with the Law on Tax Administration and its implementing regulations.

2. The taxpayer's documentation for determining transfer pricing includes:
3. a) National records are information on related-party transactions, policies and methods for determining prices for related-party transactions, compiled and stored at the taxpayer's headquarters according to the list of information and documents specified in Form No. 02 issued with Decree No. 20/2017/ND-CP.
4. b) Global documentation includes information on the business operations of a multinational corporation, its global policies and methods for determining transfer pricing, and its policies for allocating income and functions within the value chain, according to the list of information and documents specified in Form No. 03 issued with Decree No. 20/2017/ND-CP.

Taxpayers must prepare and provide the Global File of the multinational corporation where the taxpayer's financial statements in Vietnam are consolidated, in accordance with accounting regulations. If the taxpayer is a subsidiary of multiple parent companies belonging to different multinational corporations and the taxpayer's financial statements are consolidated across multiple corporations, the taxpayer must provide the Global File of all these corporations.

1. c) A copy of the Country-by-Country Report of the taxpayer's ultimate parent company abroad, prepared in accordance with the laws of the host country.

In cases where the taxpayer is a subsidiary of multiple parent companies belonging to different multinational corporations, and the taxpayer's financial statements are used to prepare consolidated financial statements for multiple corporations, the taxpayer must retain copies of the Country-by-Country Reports of all parent companies.

If the taxpayer is unable to provide the Country-by-Country Report of the ultimate parent company for the tax period corresponding to the taxpayer's tax settlement period, the taxpayer must provide the Country-by-Country Report of the ultimate parent company for the fiscal year immediately preceding the taxpayer's tax period and provide a written explanation of the reason along with the taxpayer's Transfer Pricing Documentation.

If the taxpayer is unable to provide the Country-by-Country Report of the ultimate parent company, the taxpayer must provide a written explanation of the reason along with the Transfer Pricing Documentation.

1. d) Information in the transfer pricing documentation is considered material if it affects the results of the independent comparative analysis; the transfer pricing method; or the results of adjustments to the taxpayer's price level, profit margin, or profit allocation ratio.

Article 5. Exemption from preparing Transfer Pricing Documentation as prescribed in Point c, Clause 2, Article 11 of Decree No. 20/2017/ND-CP

1. Taxpayers exempt from preparing Transfer Pricing Documentation as stipulated in point c, clause 2, Article 11 of Decree No. 20/2017/ND-CP apply the net profit margin before deducting interest expenses and corporate income tax on revenue determined in the tax period as net profit before deducting interest expenses and corporate income tax (excluding the difference between revenue and expenses of financial activities) divided by net revenue.

Net revenue, as defined by tax policies and accounting regulations, is the difference between revenue from sales and services minus (-) revenue deductions for the period of the taxpayer.

2. In cases where a taxpayer conducts business in more than one simple field as stipulated in point c, clause 2, Article 11 of Decree No. 20/2017/ND-CP, the net profit margin before deducting interest expenses and corporate income tax on net revenue shall be applied as follows:
3. a) In cases where taxpayers separately track and account for revenue and expenses in each sector, the net profit margin before deducting interest expenses and corporate income tax on net revenue corresponding to each sector shall be applied.
4. b) In cases where the taxpayer can separately track and account for revenue but cannot separately track and account for the expenses incurred in each area of ​​production and business activities, the expenses shall be allocated according to the revenue ratio of each area to apply the net profit margin before deducting interest expenses and corporate income tax on net revenue corresponding to each area.
5. c) In cases where the taxpayer cannot separately track and account for the revenue and expenses of each production and business activity to determine the net profit margin before deducting interest expenses and corporate income tax corresponding to each activity, the net profit margin before deducting interest expenses and corporate income tax on net revenue of the activity with the highest margin shall be applied.
6. Taxpayers applying the guidance in Clause 1 of this Article shall declare Form No. 01 in the Appendix issued with Decree No. 20/2017/ND-CP according to the guidance in Appendix 02 issued with this Circular.

If the taxpayer chooses not to apply the provisions of Clause 1 of this Article, they must prepare a Transfer Pricing Documentation File and declare the transfer pricing in accordance with Article 10 of Decree No. 20/2017/ND-CP and Clause 1, Article 4 of this Circular.

Article 6. Enforcement

1. This Circular takes effect from the effective date of Decree No. 20/2017/ND-CP. Circular No. 66/2010/TT-BTC dated April 22, 2010 of the Ministry of Finance guiding the implementation of determining market prices in business transactions between related parties and Form No. 03-7/TNDN issued with Circular No. 156/2013/TT-BTC dated November 6, 2013 of the Ministry of Finance are hereby repealed.
2. During the implementation process, if any difficulties arise, agencies, organizations, and individuals are requested to promptly report them to the Ministry of Finance for consideration and guidance.

Recipients: - Party Central Office and Committees of the Party; – Vice President of the National Assembly, Vice President of the Republic; – Ministries, ministerial-level agencies, and agencies under the Government; – Supreme People's Procuratorate; Supreme People's Court; - State Audit; – Central agencies of mass organizations; – People's Committees and Departments of Finance of provinces and centrally-administered cities; – Tax departments of provinces and centrally-administered cities; - Units under the Ministry; - Department of Document Inspection (Ministry of Justice); - Announcement; - Government website; - Website Ministry of Finance; – Save: VT; TCT (VT, TTr).

KT MINISTER DEPUTYDo Hoang Anh Tuan

APPENDIX I

FORMULAS FOR CALCULATING THE QUARTICLE, STANDARD INDEPENDENT TRADING INTERVAL, AND MEDIAN VALUE
(Issued in conjunction with Circular No. XNXX / 41 / TT-BTC dated April 30, 2012, Year of the year of the Ministry of Finance)

The formulas for calculating the quartile function, the standard independent trading range, and the median value are determined using the Quartile function in Microsoft Excel as follows:

1.1. Calculation method

– Create a data range in Excel consisting of cells containing values ​​for price levels, profit margins, or profit allocation ratios determined from independent comparison objects (this can be a column or a row).

– Move the cursor to a cell outside the data range and execute the Quartile command to find the corresponding quartile values, specifically:

QUARTILE (Data range, parameters)

Data area: It is a region containing values ​​related to price levels, profit margins, or profit allocation ratios.

Parameters: Receive the corresponding values ​​0, 1, 2, 3, 4.

+ The first quartile is the value of the QUARTILE function with a parameter of 1.

The second quartile (median) is the value of the QUARTILE function with a parameter of 2.

The third quartile is the value of the QUARTILE function with a parameter of 3.

+ The standard independent trading range is the range of values ​​from the first to the third quartile.

1.2. Illustration

In 201x, company A selected independent companies for comparison with the following net return on assets figures: 1,0; 1,25; 1,25; 1,5; 1,5; 1,75; 2,0; 2,0; 2,0; 2,25; 2,5; 2,75; 3,0.

Determine the quartile values ​​of the Quartile function in Excel as follows:

From this, we can determine the standard independent transaction range of the profit rate values ​​as the range from the first to the third quartile: [1,5;2,25]; median: 2,0.

APPENDIX II

INSTRUCTIONS FOR FORM NO. 01 RELATED PARTNERSHIP AND RELATED TRANSACTION INFORMATION
(Issued together with Circular sstink Circular No. 41/2017/TT-BTC dated April 28, 2017 of The set Tài chính)

1. Tax period: Record the information corresponding to the tax period of the Corporate Income Tax Return. The tax period is determined according to the provisions of the Corporate Income Tax Law.
2. General information of taxpayers: From item [01] to item [10] record information corresponding to the information recorded in the Corporate Income Tax Final Settlement Declaration.
3. Section I. Information about Affiliated Parties:

– Column (2): Fill in the full name of each affiliate:

+ If the affiliated party in Vietnam is an organization, record the information as stated in the business registration certificate; if it is an individual, record the information as stated in their identity card, citizen identification card, or passport.

+ If the related party is an organization or individual outside Vietnam, the information should be recorded according to the document establishing the related party relationship, such as the business registration certificate, contract, or transaction agreement between the taxpayer and the related party.

– Column (3): Record the name of the country or territory where the affiliated party is the resident.

– Column (4): Record the tax code of the affiliated parties:

+ If the affiliated party is an organization or individual in Vietnam, please provide the full tax identification number.

+ If the affiliated party is an organization or individual outside Vietnam, please provide the full tax code and taxpayer identification number; if none are available, please state the reason.

– Column (5): Based on the provisions of Clause 2, Article 5 of Decree No. 20/2017/ND-CP, the taxpayer declares the relationship with each related party by marking “x” in the corresponding box. In case the related party belongs to more than one form of related party relationship, the taxpayer marks “x” in the corresponding boxes.

The information in Section I is declared for related parties that have related-party transactions with the taxpayer as stipulated in Clause 3, Article 4 of Decree No. 20/2017/ND-CP.

1. Section II. Cases exempt from the obligation to declare and submit documentation for determining transfer pricing:

If the taxpayer is exempt from the obligation to declare and prepare the Transfer Pricing Documentation as stipulated in Article 11 of Decree No. 20/2017/ND-CP in Column (2), then mark “x” in the corresponding exemption box in Column (3).

In cases where taxpayers are exempt from declaring transfer pricing as prescribed in Clause 1, Article 11 of Decree No. 20/2017/ND-CP, taxpayers only need to mark the corresponding box in Column (3) and do not have to declare items III and IV of Form No. 01 attached to Decree No. 20/2017/ND-CP.

In cases where taxpayers are exempt from preparing Transfer Pricing Documentation as stipulated in point a or point c, Clause 2, Article 11 of Decree No. 20/2017/ND-CP, taxpayers shall declare items III and IV according to the corresponding instructions in sections D.1 and E.

In cases where taxpayers are exempt from preparing Transfer Pricing Documentation as stipulated in point b, clause 2, Article 11 of Decree No. 20/2017/ND-CP, taxpayers shall declare according to the corresponding instructions in sections D.2 and E.

Section III. Information for determining transfer pricing:

Article 1. In cases where the taxpayer is exempt from preparing a Transfer Pricing Documentation File as stipulated in point a or point c, Clause 2, Article 11 of Decree No. 20/2017/ND-CP and has marked (x) in column 3, line a or line c, the exemption from preparing a Transfer Pricing Documentation File in Section II of Form No. 01 attached to Decree No. 20/2017/ND-CP, this section shall be declared as follows:

– Columns (3), (7) and (12): Fill in as instructed in Section D.2 of this Appendix.

– Columns (4), (5), (6), (8), (9), (10) and (11): Taxpayers leave blank and do not declare.

For cases where taxpayers are exempt from preparing Transfer Pricing Documentation as prescribed in point a, clause 2, Article 11 of Decree No. 20/2017/ND-CP, the total value of all related-party transactions arising in the tax period used as the basis for determining the exemption conditions is calculated by (=) the total value in Column (3) plus (+) Column (7) of the line item “Total value of transactions arising from related-party activities”.

Article 2. Taxpayers who are not exempt from preparing Transfer Pricing Documentation under point a or point c of Clause 2, Article 11 of Decree No. 20/2017/ND-CP shall declare as follows:

– The indicator “Total value of transactions arising from business operations”:

+ Column (3): Record the total sales revenue to affiliated and independent parties, including: Sales revenue and service provision, financial activity revenue and other income (excluding collected amounts).

+ Column (7): Record the total value of expenses payable to related parties and independent parties, including: Costs of purchased goods and services, financial costs, selling costs, business management costs and other costs (excluding expenses paid on behalf of others).

+ Columns (4), (5), (6), (8), (9), (10), (11), (12) and (13): Leave blank, no declaration required.

– Indicator “Total value of transactions arising from related-party activities”:

+ Columns (3), (4), (7) and (8): Record the total value in the corresponding cells for each Goods plus (+) Services indicator.

– The "Goods" indicator:

+ Columns (3), (4), (7) and (8): Record the total value in the corresponding cells for the indicators Goods that form fixed assets plus (+) Goods that do not form fixed assets.

– The item "Goods forming fixed assets" and the detailed lines "Related Party A", "Related Party B",…:

+ Columns (3) and (7): Record the total value arising from the purchase or sale of fixed assets by the taxpayer with related parties according to the value in the accounting books.

+ Columns (4) and (8): Record the total value arising from the purchase or sale of fixed assets with related parties determined according to the corresponding valuation method in Columns (6) and (10).

– The item "Goods not forming fixed assets" and the detailed lines "Related Party A", "Related Party B",…:

+ Columns (3) and (7): Record the total value arising from the purchase or sale of goods that are not fixed assets of the taxpayer with related parties according to the value in the accounting books.

+ Columns (4) and (8): Record the total value arising from the purchase or sale of goods that are not fixed assets of the taxpayer with related parties determined according to the corresponding valuation method in Columns (6) and (10).

– The "Service" indicator:

+ Columns (3), (4), (7) and (8): Record the total value in the corresponding cells for the indicators “Research and development” plus (+) “Advertising and marketing” plus (+) “Business management and consulting, training” plus (+) “Financial activities” plus (+) “Other services”.

– The indicators include “Research and Development”; “Advertising and Marketing”; “Business Management and Consulting, Training”; “Financial Activities and Other Services”, and details for each “Affiliated Party A”, “Affiliated Party B”,…:

+ Columns (3) and (7): Record the total value of each type of service arising from transactions with related parties recorded at the value recorded in the accounting books.

+ Columns (4) and (8): Record the total value of each type of service arising from transactions with related parties determined according to the corresponding pricing method in Column (6) and Column (10).

– Columns (6) and (10): Record the abbreviation of the method for determining the price of related-party transactions that constitutes the selling value to the related party and the purchase value from the related party of the taxpayer, as determined according to the Related-Party Transaction Pricing Documentation as prescribed in Article 7 of Decree No. 20/2017/ND-CP and guided in Article 3 of this Circular, specifically as follows:

+ P1.1: Method of comparing related-party transaction prices with independent transaction prices (independent transaction price comparison method).

+ P1.2: Method of comparing independent transaction prices of products with publicly listed prices on domestic and international commodity and service exchanges.

+ P2.1: Method of comparing gross profit margin on revenue (resale price method).

+ P2.2: Method of comparing gross profit margin on cost of goods sold (cost-plus profit method).

+ P2.3: Method of comparing net profit margins.

+ P3: Method of profit distribution among affiliated parties.

For example:

+ Purchase machinery from affiliated party A on the basis of the independent transaction price comparison method, in the line item Goods forming fixed assets from affiliated party A Column (10): Record P1.1.

+ Collect management service fees provided to affiliated party B based on the cost plus profit method, in the line item Business management and consulting, training for affiliated party B Column (6): Record P2.2.

– Columns (5) and (9): Record the total value determined according to the calculation formula in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP.

– Column (11): Record the profit increase due to reassessment based on independent transaction prices.

– Column (12): Record in order the total value of collected payments, the total value of disbursed payments, the total value of revenue allocated to the permanent establishment, and the total value of expenses allocated to the permanent establishment incurred during the tax period.

– Column (13): Fill in according to the instructions in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP corresponding to each transaction within the scope of APA and leave blank the boxes corresponding to the lines of indicators recording the total value.

1. Section IV. Business results after determining transfer pricing:

– The indicator “Taxpayers who have signed an advance pricing agreement (APA)”:

Taxpayers should mark “x” in “Yes” if they have signed a unilateral, bilateral or multilateral APA with the Vietnamese Tax Authority. If the taxpayer has not signed an APA with the Tax Authority, they should mark “x” in “No” and leave blank the indicators in Column (4) of the business results table in this section.

– Taxpayers who only generate income or revenue with independent parties shall declare in Column (6) of the business results table in accordance with each type of enterprise for each corresponding indicator as guided in this Appendix.

1. For taxpayers in the manufacturing, trade, and service sectors:
2. In cases where the taxpayer has already marked (x) in Column 3, line 2a, exempting them from preparing the Transfer Pricing Documentation in Section II of Form No. 01 attached to Decree No. 20/2017/ND-CP, they should declare according to the following instructions:

– The criteria in lines (1), (2), (3), (4), (5), (6), (7), (8), (8.1), (9), (9.1) (10), (11), (12), (13) and (14);

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the value determined from the data in the Financial Statement.

– Item in line (15): Taxpayer leaves blank and does not declare.

1. In cases where the taxpayer has already marked (x) in Column 3, line 2c, exempting them from preparing a Transfer Pricing Documentation File in Section II of Form No. 01 attached to Decree No. 20/2017/ND-CP, they should declare according to the following instructions:

– The criteria in lines (1), (2), (3), (4), (5), (6), (7), (8), (8.1), (9), (9.1) (10), (11), (12), (13) and (14):

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the value determined from the data in the Financial Statement.

– The indicator “Rate of profit used to determine transfer pricing”

+ Column (2): Record the net profit margins before deducting interest expenses and corporate income tax on net revenue in the indicator lines (15) (a, b, c…) as prescribed in point c, clause 2, Article 11 of Decree No. 20/2017/ND-CP and Article 5 of this Circular.

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column 6: Taxpayers declare the net profit margin value before deducting interest expenses and corporate income tax on net revenue for the business sector as prescribed in point c, clause 2, Article 11 of Decree No. 20/2017/ND-CP and guided in Article 5 of this Circular.

In cases where a taxpayer participates in more than one field as guided in points a and b of Clause 2, Article 5 of this Circular, separate declarations must be made for each field.

In cases where a taxpayer participates in more than one sector as guided in point c, clause 2, Article 5 of this Circular, they shall declare taxes according to the sector with the highest rate.

1. In cases where taxpayers are not exempt from preparing Transfer Pricing Documentation as stipulated in point a or point c, Clause 2, Article 11 of Decree No. 20/2017/ND-CP, they shall declare as follows:

– The target for “Revenue from sales and services”:

+ Columns (3) and (4): Record the total value of transactions supplying goods and services to related parties, determining the price according to the Related Party Pricing Documentation in Column (3) and according to the APA in Column (4).

+ Column (5): Record the total value of transactions providing goods and services to independent parties according to the value recorded in the accounting books.

+ Column (6): Record the total value determined according to the calculation formula in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP.

For the indicators “Revenue from the sale of goods and services for export” and “Revenue deductions”: Taxpayers declare the corresponding revenue from the sale of goods and provision of services and record it according to the same instructions in the “Revenue from the sale of goods and provision of services” indicator.

– The target for “Net revenue from sales and services”:

+ Columns (3), (4), (5) and (6): Record the value equal to the corresponding value in each column at the indicator “Sales revenue and service provision” minus (-) the indicator “Revenue deductions”.

– The "Cost of Goods Sold" indicator:

+ Columns (3) and (4): Record the total value of the cost of goods sold corresponding to the revenue from sales and provision of services to related parties and equals (=) the total value arising with related parties determined according to the Transfer Pricing Documentation and according to APA plus (+) the value of transactions arising with independent parties recorded in the accounting books.

+ Column (5): Record the total value of cost of goods sold corresponding to sales revenue and provision of services to independent parties and equals (=) the total value arising with related parties determined according to the Transfer Pricing Documentation and according to APA plus (+) the value of transactions arising with independent parties recorded in the accounting books.

+ Column (6): Record the total value determined according to the calculation formula in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP.

– The indicator “Gross profit from sales and services”:

+ Columns (3), (4), (5) and (6) have the value equal to the corresponding value in each column of the indicator “Net revenue from sales and provision of services” minus (-) the indicator “Cost of goods sold”.

– The indicators for “Selling expenses” and “Administrative expenses”:

+ Columns (3) and (4): Record the total value of selling expenses and business management expenses corresponding to sales revenue and services provided to related parties equal to (=) the total value incurred with related parties determined according to the Transfer Pricing Documentation and according to APA plus (+) the value of transactions incurred with independent parties recorded in the accounting books.

+ Column (5): Record the total value of selling expenses and business management expenses corresponding to sales revenue and provision of services to independent parties equal to (=) the total value incurred with related parties determined according to the Transfer Pricing Documentation and according to APA plus (+) the value of transactions incurred with independent parties recorded in the accounting books.

+ Column (6): Record the total value determined according to the calculation formula in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP.

– For cost indicators arising in production and business activities, taxpayers shall monitor accounting and record the accounting value, separately determining costs from related parties within the scope of price determination according to the Transfer Pricing Documentation; according to APA and transactions with independent parties corresponding to columns (3), (4) and (5). If it is not possible to determine separately, the taxpayer shall choose the most appropriate allocation criterion according to one or more factors such as revenue, costs, assets, human resources or other factors consistent with the nature of the activity and record the allocated cost value in the corresponding cells (3), (4) and (5).

– The indicator “Financial operating revenue”:

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the total value of financial activity revenue.

– The "Interest Revenue from Loans" item: Records the value of interest earned from lending activities, included in financial operating revenue for the period.

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the total value as determined in the Transfer Pricing Documentation, according to APA for transactions arising with related parties and the value recorded in the accounting books for transactions arising with independent parties.

– The "Financial Costs" indicator:

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the total value of financial operating expenses.

– The "Interest Expense" item: Record the value of interest expense included in financial expenses for the period.

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the total value as determined in the Transfer Pricing Documentation, according to APA for transactions arising with related parties and the value recorded in the accounting books for transactions arising with independent parties.

– The "Depreciation Expense" item:

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the total value of depreciation expense included in the expenses during the period and is determined by the total value of depreciation expense included in the cost of goods sold, selling expenses and business management expenses.

– The indicator “Net profit from production and business operations”:

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the value equal to the corresponding value in each column at the indicator “Gross profit from sales and services” minus (-) the indicator “Selling expenses” minus (-) the indicator “Business management expenses” plus (+) the indicator “Financial revenue” minus (-) the indicator “Financial expenses”.

– The indicator “Net profit before deducting interest expenses and corporate income tax” (excluding the difference between revenue and expenses of financial activities):

+ Columns (3), (4), (5) and (6): Record the value equal to the corresponding value in each column at the indicator “Gross profit from sales and services” minus (-) the indicator “Selling expenses” minus (-) the indicator “Business management expenses”.

– The indicator “Net profit from business operations plus interest expense plus depreciation expense”:

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the value equal to the value of the indicator “Net profit from production and business activities” plus (+) the indicator “Interest expense” plus (+) the indicator “Depreciation expense”.

– The indicator “Ratio of interest expense to net profit from business operations plus interest expense plus depreciation expense”:

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the percentage value equal to (=) the value of the indicator “Interest expense” divided (:) by the value of the indicator “Net profit from business operations plus interest expense plus depreciation expense”.

– The indicator “Profit margin used to determine transfer pricing”:

+ Column (2): Record the profit margins applied to adjust and determine the transfer pricing in the indicator lines (15) (a, b, c…) corresponding to the transfer pricing method as prescribed in Clauses 2 and 3 of Article 7 of Decree No. 20/2017/ND-CP.

+ Columns (3) and (4): Record the profit margin value used to determine the transfer pricing according to the Transfer Pricing Documentation in Column (3) and according to the APA in Column (4).

+ Columns (5) and (6): Taxpayers leave blank and do not declare.

For example:

+ Taxpayers using the net profit margin comparison method and applying the net profit margin before deducting interest expense and corporate income tax on total expenses to determine net profit in the tax period, in Column (2) item (15a): Record the Net profit margin before deducting interest expense and corporate income tax on total expenses and declare the corresponding rate according to the Transfer Pricing Documentation in Column (3) and according to APA in Column (4).

+ Taxpayers using the comparative method of net profit margin and applying the net profit margin before deducting interest expenses and corporate income tax on total costs for production activities according to the Transfer Pricing Documentation; the net profit margin before deducting interest expenses and corporate income tax on net revenue for distribution activities according to APA, in Column (2) indicators (15a) and (15b): Record the net profit margin before deducting interest expenses and corporate income tax on total costs for production activities in indicator (15a) and declare the corresponding rate in Column (3); record the net profit margin before deducting interest expenses and corporate income tax on net revenue for distribution activities in indicator (15b) and declare the corresponding rate in Column (4).

– In cases where a taxpayer performs multiple production and business functions and uses different profit margins to determine transfer pricing, the results of production and business activities must be declared separately for each production and business function after determining the transfer pricing.

2. For taxpayers in the banking and credit sectors:

– Indicator “Interest income and similar income”:

+ Columns (3), (4) and (5): Record the total value of interest income and similar income from related parties not signing the APA determined according to the Transfer Pricing Documentation in Column (3), according to the APA in Column (4) and according to the book value arising with the independent party in Column (5).

+ Column (6): Record the total value determined according to the calculation formula in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP.

– Item “Interest payments and similar expenses”:

+ Columns (3) and (4): Record the total value of Interest Payments and similar expenses corresponding to Interest Income and similar income received from related parties and equals (=) the total value arising with related parties determined according to the Transfer Pricing Documentation and according to the APA plus (+) the value of transactions arising with independent parties recorded in the accounting books.

+ Column (5): Record the total value of Interest payments and similar expenses corresponding to Interest income and similar income received from independent parties equal to (=) the total value arising with related parties determined according to the Transfer Pricing Documentation and according to APA plus (+) the value of transactions arising with independent parties recorded in the accounting books.

+ Column (6): Record the total value determined according to the calculation formula in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP.

– The indicator “Net interest income”:

Columns (3), (4), (5) and (6): Record the value equal to (=) the corresponding value in each column at the indicator Interest income and similar income minus (-) the indicator Interest payments and similar expenses.

– For the item “Income from service activities”: Fill in according to the same instructions as for the item Interest income and similar income.

– For the "Service Operating Expenses" item: Record according to the same instructions as for the "Interest Payments and Similar Expenses" item.

– The indicator “Net profit/loss from service operations”:

Columns (3), (4), (5) and (6): Record the value equal to (=) the corresponding value in each column at the indicator “Income from service activities” minus (-) the indicator “Service activity expenses”.

– The indicators “Net profit/loss from foreign exchange trading”, “Net profit/loss from trading securities”, “Net profit/loss from investment securities”: Record according to the same instructions as for the indicator “Interest income and similar income”.

– For the item “Income from other activities”: Fill in according to the same instructions as for the item “Interest income and similar income”.

– For the item “Other operating expenses”: Record according to the same instructions as for the item Interest payments and similar expenses.

– Indicator “Net profit/loss from other activities”:

Columns (3), (4), (5) and (6): Record the value equal to (=) the corresponding value in each column at the indicator “Income from other activities” minus (-) the indicator “Other operating expenses”.

– For the item “Income from capital contributions and share purchases”: Record according to the same instructions as for the item “Interest income and similar income”.

– For the "Operating Expenses" item: Record according to the same instructions as for the "Interest Payments and Similar Expenses" item.

– The indicator “Credit risk provision expenses”:

+ Columns (3), (4) and (5): Record the total value of credit risk provision costs corresponding to income and revenue-related items in Columns (3), (4) and (5) that are provisioned.

+ Column (6): Record the total value determined according to the calculation formula in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP.

– For expenses incurred in business operations, taxpayers account for and determine separately each revenue item in columns (3), (4), (5) and record the separately accounted and determined value. If it is not possible to determine separately, the taxpayer chooses the most appropriate allocation method according to one or more factors such as revenue, expenses, assets, human resources or other factors suitable to the nature of the operation and record the allocated expense value in the corresponding cells (3), (4) and (5).

– The indicator “Total profit before tax”: Reflects the total profit realized before tax by the banking and credit institution during the tax period and is determined as follows:

+ Columns (3), (4), (5) and (6): Record the value equal to (=) the corresponding value in each column at the indicator “Net interest income” plus (+) the indicator “Net profit/loss from service activities” plus (+) the indicator “Net profit/loss from foreign exchange trading activities” plus (+) the indicator “Net profit/loss from trading securities” plus (+) the indicator “Net profit/loss from investment securities” plus (+) the indicator “Net profit/loss from other activities” plus (+) the indicator “Income from capital contributions, share purchases” minus (-) the indicator “Operating expenses” minus (-) the indicator “Credit risk provision expenses”.

– Target: “Net profit from business operations”:

+ Columns (3), (4), (5) and (6): Record the value equal to the corresponding value in each column at the indicator “Total profit before tax” minus (-) the indicator “Net profit/loss from other activities”.

– The indicator “Profit margin used to determine transfer pricing”:

+ Column (2): Record the profit margins applied to adjust and determine the transfer pricing in the indicator lines (15) (a, b, c…) corresponding to the transfer pricing method as prescribed in Clauses 2 and 3 of Article 7 of Decree No. 20/2017/ND-CP:

+ Columns (3) and (4): Record the profit margin value applied to determine the transfer pricing according to the Transfer Pricing Documentation in Column (3) and according to the APA in Column (4).

+ Columns (5) and (6): Taxpayers leave blank and do not declare.

3. For taxpayers who are securities companies or securities investment fund management companies:
4. If the taxpayer has already marked (x) in Column 3, line 2a, Section II of Form No. 01 attached to Decree No. 20/2017/ND-CP, please declare according to the following instructions:

– The criteria in lines (1), (2), (3), (4), (5), (6), (7), (8), (8.1), (9), (9.1) (10), (11), (12), (13) and (14):

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the value determined from the data in the Financial Statement.

– Item in line (15): Taxpayer leaves blank and does not declare.

1. In cases where taxpayers are not exempt from preparing Transfer Pricing Documentation as stipulated in point a, clause 2, Article 11 of Decree No. 20/2017/ND-CP, they shall declare as follows:

– The target "Revenue from service fees provided to customers and proprietary trading activities":

+ Columns (3), (4), (5) and (6): Record the value equal to (=) the corresponding value in each column at the indicator “Securities brokerage service fee” plus (+) the indicator “Portfolio management fee” plus (+) the indicator “Underwriting and issuance agency fee” plus (+) the indicator “Financial and securities investment consulting fee” plus (+) the indicator “Securities investment fund management fee and bonuses for the Fund Management Company” plus (+) the indicator “Revenue from fund certificate issuance fee” plus (+) the indicator “Remuneration received by the board of directors for participating in the board of directors of other companies” plus (+) the indicator “Price difference of securities bought and sold during the period, bond interest income from the securities company's proprietary trading activities, and the fund management company's financial investment activities” plus (+) the indicator “Other income as prescribed by law on providing services to customers and proprietary trading activities”.

– Indicator “Revenue from securities brokerage services”:

+ Columns (3), (4) and (5): Record the total value of securities brokerage service fees from related parties not signed with APA, determined according to the Transfer Pricing Documentation in Column (3); according to the APA in Column (4) and according to the book value arising with independent parties in Column (5).

+ Column (6): Record the total value determined according to the calculation formula in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP.

– The indicators “Investment portfolio management fees”, “Underwriting and issuance agency fees”, “Financial and securities investment advisory fees”, “Securities investment fund management fees and bonuses for fund management companies”, “Revenue from fund certificate issuance fees”, “Remuneration received by the board of directors for participating in the boards of directors of other companies”, “Price difference of securities bought and sold during the period, interest income from bonds from securities company's proprietary trading activities, financial investment activities of fund management companies”, “Other revenue as prescribed by law on providing services to customers and proprietary trading activities”: Record according to the same instructions as the indicator “Securities brokerage service revenue”.

– The indicator “Costs incurred in providing services to customers and costs for self-operated activities”:

+ Columns (3), (4), (5) and (6): Record the value equal to (=) the corresponding value in each column at the indicator “Membership fee payment at the Securities Exchange Center” (for companies that are members of the Securities Exchange Center) plus (+) “Securities custody fee, securities transaction fee at the Securities Exchange Center” plus (+) the indicator “Listing and registration fee” (for companies issuing securities listed at the Securities Exchange Center) plus (+) the indicator “Expenses related to managing investment funds and portfolios” plus (+) the indicator “Capital raising expenses for investment funds” plus (+) the indicator “Interest payment on loans” plus (+) the indicator “Remuneration for the board of directors” plus (+) the indicator “Payment of taxes, fees and charges payable related to business activities” plus (+) the indicator “Management and public service expenses, employee expenses” plus (+) the indicator “Depreciation of fixed assets” "Other expenses related to assets" plus (+) the item "Provision for impairment of securities held in proprietary trading" plus (+) the item "Other expenses as prescribed by law regarding the provision of services to customers and proprietary trading activities".

– The indicator “Payment of membership fees to the securities trading center” (for companies that are members of the Securities Trading Center):

+ Columns (3) and (4): Record the total value of the Securities Exchange Center membership fee payment (for companies that are members of the Securities Exchange Center) corresponding to the revenue received from related parties and equal to (=) the total value arising with related parties determined according to the Transfer Pricing Documentation and according to the APA plus (+) the value recorded in the accounting books for transactions arising with independent parties.

+ Column (5): Record the total value of the Securities Exchange Center membership fee payment (for companies that are members of the Securities Exchange Center) corresponding to the revenue received from independent parties and equals (=) the total value arising with related parties determined according to the Transfer Pricing Documentation and according to APA plus (+) the value recorded in the accounting books for transactions arising with independent parties.

+ Column (6): Record the total value determined according to the calculation formula in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP.

– Indicator “Securities custody fees, securities transaction fees at the Securities Trading Center”:

+ Columns (3), (4) and (5): The taxpayer separately tracks and records the total value of expenses incurred from related parties determining prices in the Transfer Pricing Documentation in Column (3); according to APA in Column (4); and from independent parties in Column (5).

+ Column (6): Record the total value determined according to the calculation formula in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP.

– Indicator “Listing and registration fees for securities” (for companies issuing securities listed on the Stock Exchange):

+ Columns (3), (4), (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the total value of securities listing and registration fees.

– The indicator “Expenses related to managing investment funds and portfolios”:

+ Columns (3) and (4): Record the total value of expenses related to the management of investment funds and portfolios corresponding to revenues of a revenue nature obtained from related parties determined by (=) the total value arising with related parties determined according to the Transfer Pricing Documentation and according to APA plus (+) the value recorded in the accounting books for transactions arising with independent parties.

+ Column (5): Record the total value of expenses related to the management of investment funds and portfolios corresponding to revenue received from independent parties determined by (=) the total value arising with related parties determined according to the Transfer Pricing Documentation and according to APA plus (+) the value recorded in the accounting books for transactions arising with independent parties.

+ Column (6): Record the total value determined according to the calculation formula in Form No. 01 of the Appendix issued with Decree No. 20/2017/ND-CP.

– The indicators “Cost of raising capital for investment funds”, “Remuneration for the board of directors”, “Payment of taxes, fees, and charges related to business operations”, “Management and operational expenses, employee costs”: Record according to the same instructions as the indicator “Expenses related to the management of investment funds and investment portfolios”.

– The "Interest Payment on Loans" item reflects the interest expense payable, which is included in financial expenses during the period.

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the total value - according to the value determined in the Transfer Pricing Documentation, according to APA for transactions arising with related parties and the value recorded in the accounting books for transactions arising with independent parties.

– The item "Depreciation expenses for fixed assets, other expenses related to assets":

+ Columns (3), (4), (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the total value equal to (=) the value in the "Depreciation expense of fixed assets" item plus (+) the "Other expenses for assets" item.

– The "Depreciation Expenses for Fixed Assets" item reflects the depreciation value of fixed assets during the tax period.

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the total depreciation value included in production and business operating costs.

– Item “Other expenses related to assets”:

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the total value of other expenses related to assets that have been included in production and business operating expenses.

– The item “Provision for impairment of securities held in proprietary trading”: Record according to the same instructions as the item “Securities custody fees, securities transaction fees at the Securities Trading Center”.

– For the item “Other expenses as prescribed by law regarding the provision of services to customers and proprietary trading activities”: Record according to the same instructions as for the item Expenses related to the management of investment funds and investment portfolios.

– The indicator “Profit (loss) from providing services to customers and proprietary trading activities”:

+ Columns (3), (4), (5) and (6): Record the value equal to (=) the corresponding value in each column at the indicator “Revenue from service fees for customers and self-business activities” minus (-) the indicator “Costs to perform service provision for customers and costs for self-business activities”.

– For the item “Other income outside of providing services to customers and proprietary trading activities”: Record according to the same instructions as for the item “Securities brokerage service fees”.

– For the item “Other expenses besides providing services to customers and proprietary trading activities”: Record according to the same instructions as for the item Expenses related to the management of investment funds and investment portfolios.

– The indicator “Other profit (loss) outside of providing services to customers and proprietary trading activities”:

+ Columns (3), (4), (5) and (6): Record the value equal to (=) the corresponding value in each column at the indicator “Other income outside of providing services to customers and self-business activities” minus (-) the indicator “Other expenses outside of providing services to customers and self-business activities”.

– For expenses incurred in business operations, taxpayers shall account for and determine separately corresponding to each type of revenue in columns (3), (4), (5) and record the separately accounted and determined value. If it is not possible to determine separately, the taxpayer shall choose the most appropriate allocation method according to one or more factors such as revenue, expenses, assets, human resources or other factors suitable to the nature of the operation and record the allocated expense value in the corresponding cells (3), (4) and (5).

– The indicator “Total accounting profit before corporate income tax”:

+ Columns (3), (4), (5) and (6): Record the total value equal to (=) the corresponding value in each column at the indicator “Profit (loss) from providing services to customers and self-trading activities” plus (+) the indicator “Other profit (loss) outside of providing services to customers and self-trading activities”.

– The indicator “Net profit from production and business operations”:

+ Columns (3), (4), (5) and (6): Record the value equal to (=) the corresponding value in each column at the indicator “Total accounting profit before corporate income tax” minus (-) the indicator “Other profit (loss) outside of providing services to customers and self-operated activities”.

– The indicator “Net profit before deducting interest expenses and corporate income tax”:

+ Columns (3), (4), (5) and (6): Record the total value equal to (=) the corresponding value in each column at the indicator “Net profit from production and business activities plus” (+) the indicator “Interest payment on loans”.

– The indicator “Net profit from business operations plus interest expense plus depreciation expense”:

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the value equal to the value of the indicator “Net profit from production and business activities” plus (+) the indicator “Interest expense” plus (+) the indicator “Depreciation expense”.

– The indicator “Ratio of interest expense to net profit from business operations plus interest expense and depreciation expense”:

+ Columns (3), (4) and (5): Taxpayers leave blank and do not declare.

+ Column (6): Record the percentage value equal to (=) the value of the indicator “Interest expense” divided (:) by the value of the indicator “Net profit from business operations plus interest expense plus depreciation expense”

– The indicator “Profit margin used to determine transfer pricing”:

+ Column (2): Record the profit margins applied to adjust and determine the transfer pricing in the indicator lines (15) (a, b, c…) corresponding to the transfer pricing method as prescribed in Clauses 2 and 3 of Article 7 of Decree No. 20/2017/ND-CP:

+ Columns (3) and (4): Record the profit margin value applied to determine the transfer pricing according to the Transfer Pricing Documentation in Column (3) and according to the APA in Column (4).

+ Columns (5) and (6): Taxpayers leave blank and do not declare.

APPENDIX III

GUIDELINES FOR FORM NO. 04 INTERNATIONAL PROFIT REPORT
(Issued in conjunction with Circular No. XNXX / 41 / TT-BTC dated April 30, 2012, Year of the year of the Ministry of Finance)

1. Tax period: Record the information corresponding to the tax period of the Corporate Income Tax Return. The tax period is determined according to the provisions of the Corporate Income Tax Law.
2. General information of taxpayers: From item [01] to item [10] record information corresponding to the information recorded in the Corporate Income Tax Final Settlement Declaration.
3. Section I. Overview of income, tax, and business allocation by country of residence:

The contents listed in currency units are converted to Vietnamese Dong according to the regulations of the corporate accounting system. In cases where related parties within the group have different fiscal years, the profit report is prepared based on the data and information in the report of the fiscal year immediately preceding the tax period of the taxpayer.

– The "Country" field: Specify the country or territory where the related parties are residents and where their permanent establishment, production facility, or business premises are located, through which the related parties conduct part or all of the production and business activities of the taxpayer and related parties within the group (including cases where the residence of these related parties cannot be determined).

+ If the ultimate parent company and its affiliated companies are tax residents in multiple countries, the tax residence must be determined according to the guidelines of the relevant tax agreement.

+ In the absence of a tax agreement between the countries or territories concerned, the country or territory where the affiliated party is registered for business should be indicated, or the country or territory where the affiliated parties have production or business facilities through which they conduct part or all of their production or business activities.

– The “Revenue” indicator: The total value of all income received during the period from related parties and independent parties, excluding dividends and profits distributed from related parties, including:

+ Independent parties: Record the total income of the group's affiliated parties in each country or territory of residence received from independent parties.

+ Affiliates: Record the total income of the group's affiliated parties in each country or territory of residence received from other affiliated parties.

+ Total Revenue: Record the total revenue value in the Independent Party column plus (+) the revenue value in the Affiliate Party column.

– The "Profit Before Tax" indicator: Records the total pre-tax accounting profit of the multinational corporation's affiliated parties in the country or territory where it resides.

– The item “Total corporate income tax payable”: Record the total corporate income tax (or similar tax) that the affiliated parties of the multinational corporation must pay in the country or territory where they reside, and the amount of similar corporate income tax (such as contractor corporate income tax) payable in other countries or territories where they reside.

The total amount of corporate income tax payable is determined based on the cash-based or accrual-based accounting system as prescribed in the place of residence of the related party, and the method applied if determined on a cash basis is noted.

– The "Income Tax Paid" item: Record the total income tax paid by all affiliated parties of the group.

If the affiliated parties have already paid corporate income tax for foreign contractors (or a similar type of tax) in a country or territory other than their place of residence, this contractor tax amount will be included in the total corporate income tax paid.

– The "Registered Capital" item: Record the total amount of committed investment capital actually disbursed by the affiliated parties of the multinational corporation in their place of residence.

– The "Accumulated Profit" indicator: Records the total accumulated undistributed after-tax profit of all affiliated parties of the group in the country at the end of the period.

– The "Number of Employees" indicator: Record the average total number of employees employed by all affiliated parties.

– The item “Tangible assets excluding cash and cash equivalents”: Record the total value of assets of related parties, including: Tangible fixed assets, Fixed assets under finance lease, Investment properties, Long-term work in progress.

1. Section II. List of subsidiaries of the group by country or territory of residence

– The “National” indicator: Record similarly to the National Indicator in Section I.

– The "Companies that are residents of the host country" field: List the legal entities of the parent company's affiliated parties that are obligated to declare corporate income tax (or similar taxes) in accordance with the laws of the country or territory where they reside.

+ If the ultimate parent company or affiliated parties have a permanent establishment in another affiliated party, record the permanent establishment corresponding to the country name line as the country or territory where the affiliated party resides.

– The field “Country or territory of business registration if different from country or territory of residence”: Enter the name of the country or territory where the group's subsidiaries are registered, if different from their country or territory of residence.

– "Business Activities" indicator: The ultimate parent company identifies the business functions of the affiliated parties, marking an "x" in the corresponding box for each function listed under "Business Activities". If the affiliated party performs more than one function, the ultimate parent company marks an "x" in all the boxes corresponding to each function.