CASES WHERE AN ENTERPRISE CONSIDERED AS HAVING TRANSACTIONS WITH RELATED PARTIES
The Government issues the Decree No. 132/2020/ND-CP on prescribing tax administration of enterprises having transactions with related parties on November 05, 2020.
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 one 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.
