On 24 February 2017, the Government released the Transfer Pricing (TP) Decree No. 20/2017/ND-CP (TP decree) to replace the existing TP regulation, Circular 66/2010/TT-BTC. The TP decree will take effect on 1 May 2017. Some of the changes introduced in the TP decree are set out below.
- Two entities are related if a party owns at least 25% (previously, 20%) of the equity of the other party.
- Guidance on the benchmarking exercise is provided in the TP decree.
- Interest on total loans is capped at 20% of earnings before interest, taxes, depreciation and amortization.
- If related-party services are rendered, the related parties must ensure, inter alia, that the services rendered are beneficial to the recipient and that such services are not duplicative in nature.
- A Vietnamese ultimate parent company with worldwide consolidated revenue in a fiscal year exceeding VND18,000 billion must prepare a master file, a local file and a country-by-country report. Other Vietnamese companies must prepare such documents if their ultimate parent companies are required to prepare the three-tiered TP documentation in their home tax jurisdiction.
- The following taxpayers are exempt from preparing TP documents:
- Taxpayers with annual total revenue below VND50 billion and total related-party transaction values below VND30 billion
- Taxpayers that have concluded advance pricing agreements (APAs) and submit annual reports for APAs
- Taxpayers that have revenue below VND200 billion, perform simple functions and achieve the prescribed earnings-to-tax ratio.
© copyright IBFD. This article is part of a selection of daily news from the IBFD Tax News Service (TNS) chosen by EY professionals. All rights to the content reside with IBFD. Any use requires IBFD’s prior permission in writing. IBFD´s disclaimer applies to any and all of IBFD’s articles and publications.