Updated at 05/07/2022 - 04:53 pm
On June 18, 6, the Ministry of Finance issued Circular No. 2021/45/TT-BTC (Circular 2021) guiding the application of Advance Pricing mechanism (APA - Advance Pricing). Agreement) in Tax administration for affiliate transactions.
Taxpayers' interests when agreeing on taxable prices in related-party transactions #
According to Circular 45, in case taxpayers (NNTs) agree on taxable prices in related-party transactions, they have certain benefits such as: withdrawing applications or stopping negotiations, inviting or hiring independent consultants. to negotiate on taxable price…
Specifically, according to the guidance in Article 9 of Circular 45/2021/TT-BTC on the rights, obligations and responsibilities of taxpayers, taxpayers have the right to request the General Department of Taxation to withdraw their applications or stop negotiations at any time. any point before the agreement on the method of determining the taxable price (APA) is signed.
The NNT has the right to invite, or hire, an independent expert who has skills and knowledge relevant to the APA's content to participate in the APA exchange and negotiation. In the documents recording the results of the exchange, the negotiation must be signed and certified by the taxpayer.
In the event that while implementing APA unilaterally, if there is a double taxation, or there is an adjustment in taxable income that leads to the taxpayer's disadvantage resulting from the decision of the partner tax authority, the taxpayer has the right to request the General Department of Taxation to amend or cancel the APA according to the provisions of Clauses 9 and 10, Article 41 of Decree No. 126/2020/ND-CP.
Regarding the obligations and responsibilities of taxpayers, according to the guidance of Circular 45, taxpayers are responsible for fully, timely, truthfully and accurately providing information and data to tax authorities during the consultation process. if any), submit official documents, appraise, negotiate, sign and implement the APA as well as in the process of processing the request for extension or amendment of the APA in accordance with the Law on Tax Administration.
The taxpayer is responsible before the law for the truthfulness and accuracy of this information.
Taxpayers are obliged to keep relevant records and documents during the process of appraisal, negotiation, signing and implementation of APA and provide them to tax authorities upon request.
The taxpayer is responsible for preparing and submitting annual APA reports for each tax year and ad hoc reports (if any) during the effective period of the signed APA. In case taxpayers commit tax administrative violations during the implementation of the signed APA, they will be sanctioned for tax administrative violations according to current regulations.
Determination of taxable prices for enterprises having associated transactions #
Circular 45 guiding the implementation of Article 41 of Decree No. 126/2020/ND-CP dated October 19, 10 of the Government on the application of APA in tax administration for enterprises having associated transactions.
Accordingly, the transactions proposed to apply APA include: The associated transactions specified in Clause 2, Article 1 of Decree No. 132/2020/ND-CP; and at the same time satisfy the following conditions: The actual transaction has arisen in the business activities of the taxpayer and will continue to take place during the period of application for APA.
Transactions that have a basis to determine the nature of the transaction determine tax obligations and have a basis for analysis, comparison and selection of independent comparables according to the provisions of Articles 6 and 7 of Decree No. 132 2020/ND-CP, based on information and data in compliance with the provisions of Point b, Clause 6, Article 42 of the Law on Tax Administration.
Circular 45 guiding the implementation of Article 41 of Decree No. 126/2020/ND-CP dated October 19, 10 of the Government on the application of APA in tax administration for enterprises having associated transactions.
Accordingly, the transactions proposed to apply APA include: The associated transactions specified in Clause 2, Article 1 of Decree No. 132/2020/ND-CP; and at the same time satisfy the following conditions: The actual transaction has arisen in the business activities of the taxpayer and will continue to take place during the period of application for APA.
The transaction has a basis to be determined The nature of the transaction determines the tax liability and have a basis for analysis, comparison and selection of independent comparables according to the provisions of Articles 6 and 7 of Decree No. 132/2020/ND-CP, based on information and data in compliance with regulations specified at Point b, Clause 6, Article 42 of the Law on Tax Administration.
Things to note of Circular 45 #
During the implementation of the APA, the taxpayer is responsible for complying with the conditions at the signed APA and for adjusting the taxable income in accordance with the price, or profit rate, or profit distribution ratio. profits specified in APA to make corporate income tax declaration and payment according to regulations.
In case the taxpayer proposes to apply the bilateral or multilateral Advance Pricing Agreement (APA) mechanism, the taxpayer is responsible for notifying the related party within the scope of application. APA to request the partner tax agency to contact and promote the exchange and negotiation with the General Department of Taxation.
In the process of carrying out tax procedures related to transfer pricing documents or associated transactions under the APA mechanism, many problems will arise that cause confusion for businesses. To help businesses solve problems, please contact EXPERTIS Consulting for assistance.
