Decree No. 132/2020/ND-CP dated November 05, 2020 of the Government on prescribing tax administration of enterprises having transactions with related parties
Cases where an enterprise considered as having transactions with related parties
On November 05, 2020, the Government issues the Decree No. 132/2020/ND-CP on prescribing tax administration of enterprises having transactions with related parties.
In accordance with this Decree, related parties shall have relationships in any of the following cases: A party participates directly or indirectly in the management, control, contribution of capital to or investment in the other; The parties are directly or indirectly subject to the management or control by or have capital contributed by or investment from a third party.
In addition to 10 cases specified in current regulations, there is ore case where an enterprise is considered as having transactions with related parties. To be specific: The enterprise has transactions of transferring or receiving the transfer of capital contribution of at least 25% of the contributed capital of the owner of the enterprise in the tax period; borrowing or lending at least 10% of contributed capital of the owner at the time of arising transactions in the tax period with the operator or controller of an enterprise.
The taxpayer shall be exempted from declaring or formulating dossiers of determining prices of related-party transactions only if it has transactions with related parties that are liable to pay enterprise income tax in Vietnam, subject to the same enterprise income tax rate as applied to the taxpayer, and neither of them is entitled to enterprise income tax incentives in a tax period, but shall provide bases for such exemption.
This Decree takes effect on December 20, 2020 and applies from the 2020 enterprise income tax period.
For further details of the Decree 132/2020/ND-CP, Click here
translation of the Official Gazette of the Vietnam News Agency
THE SOCIALIST REPUBLIC OF VIETNAM
Hanoi, November 05, 2020
On prescribing tax administration of enterprises having transactions with related parties
Pursuant to the Law on Organization of the Government dated June 19, 2015; the Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and the Law on Organization of Local Administration dated November 22, 2019;
Pursuant to the Law on Tax Administration dated June 13, 2019;
Pursuant to the Law on Enterprise Income Tax dated June 03, 2008 and the Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax dated June 19, 2013;
Pursuant to the Law Amending and Supplementing a Number of Articles of the Tax Laws dated November 26, 2014;
At the proposal of the Minister of Finance;
The Government hereby promulgates the Decree on prescribing tax administration of enterprises having transactions with related parties.
Article 1. Scope of regulation
1. This Decree prescribes principles, methods, order for determining factors of prices of transactions with related parties; rights and obligations of taxpayers in the determination of prices of transactions with related parties and procedures for declaration; responsibilities of state agencies for tax administration of taxpayers having transactions with related parties.
2. Related-party transactions regulated by this Decree are transactions of purchase, sale, exchange, lease, rent, free-of-charge borrowing and lending, delivery and transfer of goods and provision of services; borrowing, lending, financial service, financial security and other financial instruments; purchase, sale, exchange, lease and rent, free-of-charge borrowing and lending, delivery and transfer of tangible assets, intangible assets and agreement on purchase, sale or common use of resources such as assets, capital, employees and sharing of costs between related parties, except for business transactions involving goods and services whose prices are controlled by the Government in accordance with the price law.
Article 2. Subjects of application
1. Goods production and trading or service provision organizations (hereinafter collectively referred to as taxpayers) that are liable to pay enterprise income tax and have related-party transactions defined in Article 5 of this Decree.
2. Tax agencies, including the General Department of Taxation, provincial-level Tax Departments and Tax Branches.
3. State agencies, other organizations and individuals involved in the application of regulations on tax administration of related-party transactions.
Article 3. Principles of application