| GOVERMENT | SOCIAL REPUBLIC OF VIETNAM Independence - Freedom - Happiness |
| Number: 68 / 2020 / ND-CP | Hanoi, date 24 month 6 year 2020 |
DECREE
AMENDING AND SUPPLEMENTING CLAUSE 3, ARTICLE 8 OF GOVERNMENT DECREE NO. 20/2017/ND-CP DATED FEBRUARY 24, 2017, REGULATING TAX MANAGEMENT FOR ENTERPRISES WITH RELATED PARTNERSHIP TRANSACTIONS
Based on the Law on Organization of the Government dated June 19, 2015;
Based on the Law on Tax Administration dated November 29, 2006; and the Law amending and supplementing a number of articles of the Law on Tax Administration dated November 20, 2012;
Based on the Law on Corporate Income Tax dated June 3, 2008; and the Law amending and supplementing a number of articles of the Law on Corporate Income Tax dated June 19, 2013;
Based on the Law amending and supplementing a number of articles of the Laws on taxation dated November 26, 2014;
Based on the Law on Public Investment dated June 18, 2014;
Based on the Investment Law dated June 26, 2014;
Based on the Enterprise Law dated November 26, 2014;
Based on the Accounting Law dated November 20, 2015;
Based on the Law on Prices dated June 20, 2012;
At the proposal of the Minister of Finance;
The Government has issued a Decree amending and supplementing Clause 3, Article 8 of Government Decree No. 20/2017/ND-CP dated February 24, 2017, regulating tax management for enterprises with related-party transactions.
Article 1. Clause 3 of Article 8 of Government Decree No. 20/2017/ND-CP dated February 24, 2017, regulating tax management for enterprises with related-party transactions, is amended and supplemented as follows:
3. Total interest expense deductible when determining taxable income for corporate income tax purposes for enterprises with related-party transactions:
a) The total interest expense (after deducting interest on deposits and loans) incurred during the period that is deductible when determining taxable income for corporate income tax purposes shall not exceed 30% of the total net profit from business operations during the period plus the interest expense (after deducting interest on deposits and loans) incurred during the period plus the depreciation expense incurred during the period.
b) The portion of interest expense not deductible under point a of this clause shall be carried forward to the next tax period when determining the total deductible interest expense, provided that the total deductible interest expense incurred in the next tax period is lower than the amount stipulated in point a of this clause. The carry-forward period for interest expense shall not exceed 05 years from the year following the year in which the non-deductible interest expense was incurred.
c) The provisions in point a of this clause do not apply to loans of taxpayers that are credit institutions under the Law on Credit Institutions; insurance business organizations under the Law on Insurance Business; official development assistance (ODA) loans, preferential loans of the Government implemented through the method of the Government borrowing from foreign countries to lend to enterprises; loans for implementing national target programs (new rural development program and sustainable poverty reduction program); loans for investment in programs and projects implementing the State's social welfare policies (resettlement housing, housing for workers, students and other public welfare projects).
d) Taxpayers shall declare the ratio of interest expense in the tax period according to Form No. 01 in the Appendix issued with this Decree.”
Article 2. Implementation and Effective Date
1. This Decree takes effect from the date of signing and applies from the corporate income tax period of 2019.
2. For the corporate income tax periods of 2017 and 2018, cases falling under the scope of application as stipulated in Clause 3, Article 8 of Decree No. 20/2017/ND-CP dated February 24, 2017, shall be subject to the provisions of Clause 3, Article 8 of Decree No. 20/2017/ND-CP, as amended and supplemented by Article 1 of this Decree, specifically as follows:
a) Taxpayers are allowed to submit supplementary corporate income tax returns for the years 2017 and 2018 to determine interest expense and the corresponding corporate income tax payable (if any), and submit them to the directly managing tax authority before January 1, 2021. The directly managing tax authority is responsible for tax management and inspection of tax returns at its office in accordance with the Law on Tax Administration and its implementing regulations.
If, after filing an amended tax return, the corporate income tax amount decreases, the corresponding late payment penalty (if any) will also be reduced.
b) In cases where the taxpayer has paid more corporate income tax and late payment penalties to the state budget than the recalculated corporate income tax and late payment penalties, the difference will be offset against the corporate income tax for 2020. If the corporate income tax for 2020 is insufficient to fully offset the difference, the remaining amount will be offset against the corporate income tax payable in subsequent years, but for a maximum of 05 years from 2020. After this period, any remaining unoffset tax will not be processed.
c) In cases where the tax authority or competent state agency has conducted an inspection or audit and has issued inspection or audit conclusions and handling decisions in accordance with the Law on Tax Administration, the taxpayer may request the directly managing tax authority to recalculate the amount of tax payable. Based on the taxpayer's request and relevant documents, the tax authority shall recalculate the amount of tax payable and the corresponding late payment penalty to offset the difference as stipulated in point b of this clause. The recalculation of the amount of tax payable shall be carried out at the tax authority's headquarters, without conducting a re-inspection or audit at the taxpayer's premises, and without adjusting the conclusions and decisions of the 2017 and 2018 inspection or audit. In cases where administrative penalties for tax violations have been imposed or are being processed through the appeals procedure, the amount of administrative penalties for tax violations shall not be adjusted.
3. Form No. 01 Information on related party relationships and related party transactions in the Appendix attached to this Decree replaces Form No. 01 Information on related party relationships and related party transactions in the Appendix attached to Decree No. 20/2017/ND-CP dated February 24, 2017 of the Government regulating tax management for enterprises with related party transactions.
4. Ministers, heads of ministerial-level agencies, heads of government agencies, chairpersons of provincial and centrally-administered city People's Committees, and relevant organizations and individuals are responsible for implementing this Decree.
APPENDIX
(Attached to Decree No. 68/2020/ND-CP dated June 24, 2020 of the Government)
|
Sample number 01 |
Information about related party relationships and related-party transactions. |
Sample number 01
INFORMATION REGARDING RELATED PARTNERSHIPS AND RELATED TRANSACTIONS
(Attached is Corporate Income Tax Return Form No. 03/TNDN)
Tax period: from …………………. to ……………………
[01] Taxpayer's name
[02] Tax code:
[03] Address: …………………………………………………………………………………………………….
[04] District/County: …………………….. [05] Province/City: ………………………………………………
[06] Phone: ………………………… [07] Fax: …………………….. [08] Email: ………………………
[09] Name of tax agent (if any): …………………………………………………………………………………
[10] Tax code:
SECTION I. INFORMATION ABOUT RELATED PARTIES
|
STT |
Affiliate name |
Countries |
Tax code |
Forms of association1 |
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(1) |
(2) |
(3) |
(4) |
A |
B |
C |
D |
Đ |
E |
G |
H |
I |
K |
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1 |
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2 |
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3 |
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... |
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______________________________
1 Taxpayers should mark an "x" in the column for the type of related party declared as prescribed in Clause 2, Article 5 of Government Decree No. 20/2017/ND-CP dated February 24, 2017. If the related party belongs to more than one type of related party, the taxpayer should mark an "x" in the corresponding boxes.
SECTION II. CASES EXEMPT FROM DECLARATION OBLIGATIONS AND EXEMPTION FROM SUBMITTING DOCUMENTS FOR DETERMINING RELATED-TO-RELATED TRANSACTION PRICES
|
STT |
Exemption cases |
Exempt2 |
|
(1) |
(2) |
(3) |
|
1 |
Exempt from declaring transfer pricing under sections III and IV below. |
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|
The taxpayer only conducts transactions with related parties that are subject to corporate income tax in Vietnam, applying the same corporate income tax rate as the taxpayer, and neither party is entitled to corporate income tax incentives during the tax period. |
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2 |
Exemption from preparing Transfer Pricing Documentation. |
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a |
Taxpayers who have related-party transactions but whose total revenue for the tax period is less than VND 50 billion and whose total value of all related-party transactions during the tax period is less than VND 30 billion |
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|
b |
Taxpayers who have signed an Advance Pricing Agreement are required to submit annual reports in accordance with the law on Advance Pricing Agreements. |
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c |
Taxpayers engaged in business with simple functions, not generating revenue or expenses from the exploitation or use of intangible assets, and with revenue under 200 billion VND, are subject to the net profit margin before interest and corporate income tax on revenue, including the following sectors: |
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– Distribution: 5% or more |
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– Production: 10% or more |
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– Processing: 15% or more |
________________________________
2 Taxpayers should mark an "x" next to the applicable exemption.
SECTION III. INFORMATION FOR DETERMINING RELATED PARTY TRANSACTION PRICES
Currency: Vietnamese Dong
|
STT |
Content |
Sales value to related parties |
Purchase value for related parties |
Profits increased due to revaluation based on independent transaction prices. |
Collection and disbursement of funds, allocation of permanent residence facilities.3 |
This transaction falls within the scope of the APA.4 |
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|
The recognized value of related-party transactions |
Reassessed value based on independent transaction prices. |
Difference |
Pricing methods |
The recognized value of related-party transactions |
Value determined by independent transaction price |
Difference |
Pricing methods |
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|
(1) |
(2) |
(3) |
(4) |
(5) = (4) - (3) |
(6) |
(7) |
(8) |
(9) = (8) - (7) |
(10) |
(11) = (5) + (9) |
(12) |
(13) |
|
I |
Total value of transactions arising from business operations |
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II |
Total transaction value arising from related party activities |
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1 |
Goods |
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1.1 |
Goods that constitute fixed assets |
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a |
Affiliate A |
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b |
Affiliate B |
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... |
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1.2 |
Goods that do not constitute fixed assets. |
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a |
Affiliate A |
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b |
Affiliate B |
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... |
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2 |
Services |
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2.1 |
Research and development |
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a |
Affiliate A |
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b |
Affiliate B |
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... |
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2.2 |
Advertising, marketing |
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a |
Affiliate A |
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b |
Affiliate B |
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... |
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2.3 |
Business management and consulting, training |
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a |
Affiliate A |
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b |
Affiliate B |
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... |
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2.4 |
Financial activities |
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2.4.1 |
Royalties and similar fees |
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A |
Affiliate A |
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B |
Affiliate B |
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|
... |
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2.4.2 |
Interest |
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A |
Affiliate A |
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B |
Affiliate B |
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|
... |
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2.5 |
Other services |
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|
A |
Affiliate A |
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B |
Affiliate B |
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|
... |
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________________________________
3 The value allocated to a permanent establishment must be declared and clearly indicated as an allocation of revenue or expenses to the permanent establishment.
4 Taxpayers declare "x" for transactions that fall within the scope of the APA and "no" for transactions that do not fall within the scope of the APA.
SECTION IV. BUSINESS RESULTS AFTER DETERMINING RELATED PARTY TRANSACTION PRICES
1. For taxpayers in the manufacturing, trade, and service sectors.
|
The taxpayer has signed an advance pricing agreement (APA). |
There is □ |
No □ |
Currency: Vietnamese Dong
|
STT |
Targets |
Related party transaction value |
Transaction value with independent parties |
Total value generated from business operations during the period |
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|
Value determined according to the Transfer Pricing Documentation |
Value determined according to APA |
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|
(1) |
(2) |
(3) |
(4) |
(5) |
(6) = (3) + (4) + (5) |
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1 |
Revenue from sales and service provision |
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This includes: – Revenue from the sale of exported goods and services. |
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2 |
Revenue deductions |
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3 |
Net revenue from sales and provision of services (3)=(1)-(2) |
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XNUMX |
Cost of goods sold |
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5 |
Gross profit from sales and services (5)=(3)-(4) |
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6 |
Cost of sales |
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7 |
Enterprise Cost Management |
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8 |
Revenue from financial activities |
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8.1 |
This includes: – Interest on deposits and interest on loans |
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9 |
Financial expenses |
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|
9.1 |
In which: – Interest expense |
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10 |
Depreciation expense incurred during the period |
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11 |
Net profit from business operations during the period (11)=(5)-(6)-(7)+(8)-(9) |
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12 |
Net profit from business operations during the period does not include the difference between revenue and expenses of financial activities (12)=(11)-(8)+(9) |
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13 |
Total net profit from business operations plus interest expense (after deducting interest on deposits and loans) in the period plus depreciation expense in the period (13)=(11)+(9.1)-(8.1)+(10) |
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14 |
The ratio of interest expense (after deducting interest on deposits and loans) incurred during the period to total net profit from business operations plus interest expense (after deducting interest on deposits and loans) during the period plus depreciation expense during the period (14)=((9.1)-(8.1))/(13) |
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|
15 |
Interest expense carried forward from previous periods. |
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15a |
In which: – Interest expense (after deducting interest on deposits and interest on loans) from year (n-1) carried over to tax period (n) |
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15b |
– Interest expense (after deducting interest on deposits and interest on loans) carried forward from year (n-2) to tax period (n) |
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15c |
– Interest expense (after deducting interest on deposits and interest on loans) carried forward from year (n-3) to tax period (n) |
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15d |
– Interest expense (after deducting interest on deposits and interest on loans) carried forward from year (n-4) to tax period (n) |
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15 VNĐ ~ XNUMX USD |
– Interest expense (after deducting interest on deposits and interest on loans) carried forward from year (n-5) to tax period (n) |
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15e |
– Interest expense (after deducting interest on deposits and loans) from previous periods that is carried forward to the next period (n+1) |
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16 |
Interest expense ratio (after deducting interest on deposits and loans) incurred on total net profit from business operations plus interest expense (after deducting interest on deposits and loans) in the period plus depreciation expense in the period (16)=(9.1)-(8.1)+(15a)+(15b)+(15c)+(16d)+(15d)))/(13) |
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17 |
Profit margin used to determine transfer pricing. |
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a |
– Rate ……………………………….. |
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b |
– Rate ………………………………… |
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|
c |
– ………………………………………….. |
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2. For taxpayers in the banking and credit sectors.
|
The taxpayer has signed an advance pricing agreement (APA). |
There is □ |
No □ |
Currency: Vietnamese Dong
|
STT |
Targets |
Related party transaction value |
Transaction value with independent parties |
Total value generated from business operations during the period |
|
|
Value determined according to the Transfer Pricing Documentation |
Value determined according to APA |
||||
|
(1) |
(2) |
(3) |
(4) |
(5) |
(6) = (3) + (4) + (5) |
|
1 |
Interest income and similar income |
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|
2 |
Pay interest and similar fees. |
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|
3 |
Net interest income |
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4 |
Income from service activities |
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|
5 |
Service operation costs |
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6 |
Net profit/loss from service operations |
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7 |
Net profit/loss from foreign exchange trading |
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8 |
Net profit/loss from trading securities |
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9 |
Net profit/loss from buying and selling investment securities |
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10 |
Income from other activities |
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|
11 |
Other operating costs |
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|
12 |
Net profit/loss from other operations |
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|
13 |
Income from capital contributions and share purchases. |
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14 |
Operating costs |
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|
15 |
Credit risk provisioning costs |
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16 |
Total profit before tax |
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|
17 |
Net profit from business operations (17=16-12) |
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|
18 |
Profit margin used to determine transfer pricing. |
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a |
Rate …………………….. |
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b |
Rate ……………………… |
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|
c |
....................................... |
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3. For taxpayers who are securities companies and securities investment fund management companies.
|
The taxpayer has signed an advance pricing agreement (APA). |
There is □ |
No □ |
Currency: Vietnamese Dong
|
STT |
Targets |
Related party transaction value |
Transaction value with independent parties |
Total value generated from business operations during the period |
|
|
Value determined according to the Transfer Pricing Documentation |
Value determined according to APA |
||||
|
(1) |
(2) |
(3) |
(4) |
(5) |
(6) = (3) + (4) + (5) |
|
1 |
Revenue from service fees charged to customers and from proprietary trading activities. |
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|
a |
Securities brokerage service fees |
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|
b |
Portfolio management fees |
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|
c |
Collect underwriting fees and issuing agent fees. |
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|
đ |
Charges for financial and securities investment consulting services. |
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|
đ |
Collecting management fees for securities investment funds and bonuses for fund management companies. |
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|
e |
Revenue from fund certificate issuance fees |
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|
g |
Board of directors' remuneration received for serving on the boards of other companies. |
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|
h |
The difference between the buying and selling prices of securities during the period, interest income from bond trading activities of securities companies, and financial investment activities of fund management companies. |
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|
h1 |
In which: – Revenue from interest: Includes: interest on bonds, interest on bank deposits, interest on certificates of deposit |
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|
i |
Other revenues as stipulated by law regarding the provision of services to customers and self-employment activities. |
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|
i1 |
This includes: – Revenue from interest on margin loans and advances against securities sales, and interest on deferred securities sales. |
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|
2 |
Costs incurred in providing services to customers and costs associated with proprietary business operations. |
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|
a |
Payment of membership fees to the stock exchange (for companies that are members of the stock exchange). |
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|
b |
Securities custody fees and securities transaction fees at the Securities Exchange Center. |
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|
c |
Listing and registration fees for securities (for companies issuing securities listed on the Stock Exchange) |
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|
d |
Costs associated with managing investment funds and portfolios. |
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|
đ |
The cost of raising capital for an investment fund. |
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|
e |
Paying interest on loans |
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|
g |
Board of Directors remuneration costs |
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|
h |
Payment of taxes, fees, and charges payable related to business operations. |
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|
i |
Expenses for management and operations, and employee costs. |
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|
k |
Depreciation expenses for fixed assets, other expenses related to assets. |
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|
k1 |
Depreciation of fixed assets |
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|
k2 |
Other expenses related to assets |
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|
l |
Provision for impairment of securities held in proprietary trading. |
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|
m |
Other expenses as prescribed by law regarding the provision of services to customers and self-employment activities. |
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|
3 |
Profit (or loss) from providing services to customers and from proprietary trading activities. |
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|
4 |
Other income besides providing services to customers and self-employment activities. |
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|
5 |
Other expenses besides providing services to customers and proprietary trading activities. |
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|
6 |
Other profits (losses) outside of providing services to customers and proprietary trading activities. |
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|
7 |
Total accounting profit before corporate income tax. |
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|
8 |
Net profit from business operations |
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|
9 |
Net profit from business operations excludes the difference between revenue from interest rates, revenue from interest on margin loans and advances against the sale of securities, interest on deferred securities sales, and interest payments on loans. |
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|
10 |
Total net profit from business operations plus interest expense (after deducting interest on deposits and loans) in the period plus depreciation expense in the period (10)=(8)+(2e)-(1h1)-(1i1)+(2k1) |
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|
11 |
The ratio of interest expense (after deducting interest on deposits and loans) incurred during the period to total net profit from business operations plus interest expense (after deducting interest on deposits and loans) during the period plus depreciation expense during the period (12) = ((2e)-(1h1)-(1i1)/(10) |
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|
12 |
Interest expense from previous periods carried over. (12)=(12a)+(12b)+(12c)+(12d)+(12đ) In which: |
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|
12a |
– Interest expense (after deducting interest on deposits and interest on loans) from year (n-1) carried over to tax period (n) |
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|
12b |
– Interest expense (after deducting interest on deposits and interest on loans) from year (n-2) carried over to tax period (n) |
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|
12c |
– Interest expense (after deducting interest on deposits and interest on loans) from year (n-3) carried over to tax period (n) |
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|
12d |
– Interest expense (after deducting interest on deposits and interest on loans) from year (n-4) carried over to tax period (n) |
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|
12 VNĐ ~ XNUMX USD |
– Interest expense (after deducting interest on deposits and interest on loans) from year (n-5) carried over to tax period (n) |
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|
12e |
– Interest expense (after deducting interest on deposits and loans) from previous periods that is carried forward to the next period. |
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|
13 |
The ratio of interest expense (after deducting interest on deposits and loans) incurred and deductible in the period plus interest expense from previous periods carried over to the tax period (n) on total net profit from business operations plus interest expense (after deducting interest on deposits and loans) plus depreciation expense incurred in the period of the taxpayer (13) = ((2e)-(1h1)-(1i1)+ (12))/(10) |
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|
14 |
Profit margin used to determine transfer pricing. |
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|
a |
Rate ………………………… |
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|
b |
Rate ………………………… |
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|
c |
........................................ |
||||
Note:
– Indicator (1.h1) is revenue from interest: Including: interest on bonds, interest on bank deposits, interest on certificates of deposit as stated in point h1 of item 1 of this table.
– Indicator (1.i1) is the revenue from interest on margin loans and advances on securities sales, interest on deferred securities sales as stated in point i1 of item 1 of this table.
– Indicator (2.e) is the interest expense stated in point e of item 2 of this table.
– Indicator (2.k1) is the depreciation expense of fixed assets as stated in point k1 of item 2 of this table.
– Year n is the current year of the filing period.
– The performance indicators are calculated according to the formulas written at each indicator, and the value cannot be converted to zero (0).
I certify that the information provided above is accurate and I am legally responsible for the accuracy of this information.
|
TAX AGENT Full name: ………………………………. |
……………, date ……month…..year …………. |