VCN - The Government has issued Decree No. 20/2017/ND-CP on tax management for business has related transactions.
|Decree 20/2017 / ND-CP on tax management for business have affiliated transactions. Photo: Hong Van|
This Decree prescribes the principles, methods, procedures and valuation procedures related transactions; obligations of taxpayers in the declaration, the valuation of the related transaction and tax declaration and payment; and accountability of State agencies in the management, inspection, and tax inspection for taxpayers associated transactions.
Taxpayers who have related transactions have to make the declaration of related transactions; eliminate the factors that reduce the tax liability due to the dominant affiliation, to determine the impact of tax obligations associated with transactions equivalent to the independent transactions with the same conditions.
The tax authority manages, controls and inspects the related transactions of the taxpayer based on the principle of independent transactions and forms to decide to recognize the associated transactions which reduce the tax obligation of business to the State budget and make adjustments related transaction prices to determine the correct tax liability as specified in this Decree.
The Independent transaction principle is applied in transactions between independent parties; which do not have an affiliation relationship with Tax Agreements which are valid in Vietnam.
The affiliated parties are parties have a relationship in one of the following cases: A party directly or indirectly involved in the management, control or capital contribution or investment in the other; the parties directly or indirectly subject to the management, control or capital contribution or investment of another party.
The affiliated parties above are defined as follows: A company holds directly or indirectly at least 25% of the capital contributed by the owners of other businesses; both now have at least 25% of the owners of capital by a third party holds, directly or indirectly; a business is the largest shareholder of the capital contributed by the owners of the other enterprise, holds directly or indirectly at least 10% of the total shares of the other enterprise; a corporate guarantee for another business or borrowings in any form (including loans from third parties guaranteed funding from party affiliates and financial transactions) provided loans at least equal to 25% of the equity of the business owners borrowings and accounting for over 50% of the total value of the medium and long term debt of borrowers, etc.
By Hương Dịu/Thanh Thuy