▶ New Decree on transfer pricing taxation

Based on tax source erosion and profit transfer (Base Erosion and Profit Shifting (BEPS)), the transfer pricing document is structured as follows. Vietnam taxpayers need to submit Country by country report if the final parent company has submitted and stored the Country by country report.


2-1. Group information (master file)


2-2. Local transfer pricing document (local file)


2-3. Country by country report (CbCR)


3. Changing preparation date of transfer pricing document
It must be created before the filing of the corporate tax return (90 days before the end of the fiscal year).
Also, if there is a request from the tax authorities, it must be submitted within 15 business days.
Previously, it was 30 days, so it has been abbreviated.


4. Setting criteria of company to be created
Companies that fall under the following are not obliged to prepare transfer pricing documents.


4-1. With sales is 50 billion VND (about 250 million yen) and transactions with related persons reaching 50 billion VND (about 250 million yen)


4-2. With a single business content, sales are 200 billion VND (about 1 billion yen)
The ratio of EBIT (Earning Before Interest and Tax: pre-tax profit + interest expense) to sales is in the following cases
   Sales business: 5% or more
   Production business: 10% or more
   Processing business: 15% or more


4-3. When APA has been concluded and an annual report has been submitted


5. Clarification of requirements for inclusion of deduction of services and interest expense


5-1. Provision of deductibility requirements for service provision between groups
   In the case of the following conditions, deduction is allowed.
     1) It is useful for business management.
     2) Even if similar services are provided by other companies, it is considered to be worth.
     3) The service consideration is an independent company price, and the policy is consistent within the group.

It is necessary to preserve backing materials and related materials on the provision of services.

 

5-2. Provision of deductibility requirements on interest expense
    If EBITDA exceeds 20% of sales, deduction is not allowed.
    EBITDA: Earning Before Interest, tax, depreciation, amortization
    = Profit before tax + Interest expense + Depreciation expense + Amortization of goodwill
    This includes not only related party transactions but also transactions with third parties.
    Since this Decree has many unclear points in the outline, issuance of Circular which specifies details will be awaited from now on.

 

 

2017年11月21日