Circular 45/2021/TT-BTC guiding the application of APA in tax administration for enterprises with associated transactions

CIRCULARS

INSTRUCTIONS FOR APPLICATION OF PRIOR AGREEMENT METHOD ON TAX PRICE DETERMINATION METHODS (APA) IN TAX MANAGEMENT FOR ENTERPRISE WITH ASSOCIATE TRANSACTIONS

Pursuant to the Law on Tax Administration dated June 13, 6;

Pursuant to the June 03, 6 Law on Corporate Income Tax; Law amending and supplementing a number of articles of the Law on Corporate Income Tax dated June 2008, 19; Law amending and supplementing a number of articles of the Tax Law dated November 6, 2013;

Pursuant to the Government's Decree No. 218/2013/ND-CP dated December 26, 12 detailing and guiding the implementation of the Law on Corporate Income Tax; Decree No. 2013/91/ND-CP dated October 2014, 01 of the Government amending and supplementing a number of articles in the Decrees on tax regulations; Decree No. 10/2014/ND-CP dated February 12, 2015 of the Government detailing the implementation of the Law amending and supplementing a number of articles of the Law on Taxation and amending and supplementing a number of articles of the Law on Taxation. Tax Decree; Decree No. 12/02/ND-CP dated December 2015, 146 of the Government amending and supplementing a number of articles of Decree No. 2017/15/ND-CP dated July 12, 2017 and Decree No. 100/ 2016/ND-CP dated February 01, 7 of the Government;

Pursuant to Article 41 of Decree No. 126/2020/ND-CP dated October 19, 10 of the Government detailing a number of articles of the Law on Tax Administration;

Pursuant to the Government's Decree No. XNXX / 132 / ND-CP dated 2020 month 05XYYXX on regulations on tax administration for enterprises with associated transactions;

Pursuant to Decree No. 87/2017/ND-CP dated July 26, 7 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the proposal of the Director of the General Department of Taxation;

The Minister of Finance promulgates a Circular guiding the application of the prior agreement on tax calculation method (APA) in tax administration for enterprises having associated transactions.

Article 1. Scope

1. This Circular guides the implementation of Article 41 of the Government's Decree No. 126/2020/ND-CP dated October 19, 10 on the application of the Prior Agreement mechanism on the method of determining taxable prices (below). referred to as APA) in tax administration for enterprises with associated transactions.

2. Other contents of the APA mechanism are implemented in accordance with the provisions of the Law on Tax Administration No. 38/2019/QH14 dated June 13, 6, Decree No. 2019/132/ND-CP dated November 2020, 05 Government's regulations on tax administration for enterprises having associated transactions and other relevant legal documents.

Article 2. Subject of application

1. Goods and service production and trading organizations that are corporate income tax payers by the method of declaration, conduct transactions with related parties and make requests to tax authorities for apply the APA. The parties have an association relationship specified in Article 5 of Decree No. 132/2020/ND-CP.

2. General Department of Taxation and Department of Taxation (hereinafter referred to as tax authorities).

3. Other state agencies, organizations and individuals related to the application of APA in tax administration.

Article 3. Transactions proposed to apply APA

1. Transactions proposed to apply APA are associated transactions specified in Clause 2, Article 1 of Decree No. 132/2020/ND-CP.

2. Transactions proposed to apply APA under Clause 1 of this Article must simultaneously satisfy the following conditions:

a) Actual transactions have arisen in the taxpayer's production and business activities and will continue to take place during the period of application for APA.

b) The transaction has a basis to determine the nature of the transaction, which determines the tax liability and there is a basis for analysis, comparison and selection of independent comparables according to the provisions of Articles 6 and 7 of the 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.

c) Transactions are not subject to tax disputes or complaints.

d) Transactions are made transparently, not for the purpose of evading, avoiding tax or taking advantage of the Tax Agreement.

Article 4. Explain words

In addition to the terms explained in the Tax Administration Law and Decree No. 132/2020/ND-CP, the following terms are construed as follows:

1. “Unilateral APA” means an agreement signed between the Vietnamese tax authority and the taxpayer requesting the application of APA.

2. “Bilateral APA” means an agreement signed between the Vietnamese tax authority, the taxpayer and a partner tax authority related to the determination of the taxpayer's tax liability that proposes to apply the APA on Tax Agreement basis.

3. “Multilateral APA” means an agreement signed between the Vietnamese tax authority, the taxpayer and many partner tax authorities related to the determination of the taxpayer's tax liability, who proposes to apply the APA on Tax Agreement basis.

Article 5. Principles of application of APA

1. APA is applied on the principle that tax authorities and taxpayers or Vietnamese tax authorities and partner tax authorities and taxpayers cooperate, exchange and negotiate on the application of legal regulations on the performance of corporate income tax obligations for related-party transactions within the scope of APA in accordance with the principles of independent transactions and the principle that the nature of operations and transactions determine tax obligations.

2. The application of APA aims to improve the efficiency of tax administration, reduce the cost of tax compliance, determine the price of related-party transactions of taxpayers in accordance with the principles of analysis and comparison with other transactions. Independent translation and principles of the nature of operations, transactions determine tax obligations to determine the nature of related-party transactions, payable corporate income tax obligations of taxpayers as in the terms of transactions between parties. independence and prevent double taxation and tax evasion, and reduce disputes over price determination of related transactions.

3. The taxpayer's request for APA application shall be settled on the basis of a dossier with necessary documents and information as prescribed in Clause 3, Article 41 of Decree No. 126/2020/ND-CP issued by the taxpayer. provide complete, accurate, honest, timely.

4. The analysis, comparison and selection of independent comparables and methods used to compare and determine the price of related-party transactions within the scope of application of APA shall comply with the provisions of Decree No. Decree No. 132/2020/ND-CP.

5. The application of the APA mechanism must ensure compliance with the principles specified in Clause 6, Article 42 of the Law on Tax Administration.

Article 6. Dossier and information, data of use

1. Dossier to apply for APA shall comply with the provisions of Clause 3, Article 41 of Decree No. 126/2020/ND-CP.

Dossier of application for APA shall be presented in Vietnamese; In case of application for bilateral or multilateral APA, the English version shall be included. Taxpayers affix their seals for certification and are responsible for the content of the translation.

For dossiers of application for bilateral or multilateral APA, the taxpayer is responsible for the uniformity of the content between the dossier submitted to the Vietnamese tax authority and the dossier submitted by the related party within the scope of the proposal. APA proposal is submitted to the partner tax authority.

2. The information, data and database used must comply with the provisions of Point b, Clause 6, Article 42 of the Law on Tax Administration and Article 17 of Decree No. 132/2020/ND-CP.

Article 7. Appraisal of application for APA

1. The General Department of Taxation conducts the assessment of taxpayers' application for APA in order to check, compare, determine and evaluate the completeness, accuracy, legality, reasonableness and validity of the information. information and data provided by taxpayers to provide an assessment of the associated transaction price determination method, the selected comparison object is suitable for determining the price, profit margin or rate. profit distribution for transactions within the scope of application of APA.

2. During the appraisal, the General Department of Taxation may apply the following measures:

a) Request taxpayers and other relevant organizations and individuals to explain and clarify information in the application file for APA.

b) Apply tax administration measures to taxpayers to verify the completeness, accuracy, lawfulness, rationality and validity of information and documents provided by taxpayers.

Article 8. Exchange and negotiation of APA . content

1. The General Department of Taxation shall exchange and negotiate APA contents with taxpayers (in case of application of APA unilaterally) or with partner tax authorities and taxpayers (in case of application of APA unilaterally). Bilateral and multilateral APA) in the form of meetings, face-to-face meetings or by telephone, online television or by written correspondence on the contents related to the application of the APA of the taxpayers.

The exchange and negotiation aims to reach agreement with taxpayers and partner tax authorities on the expected contents of the final draft APA according to the provisions of Clause 6, Article 41 of Decree No. 126/2020/ND-CP to submit to the competent authority for approval.

The results of each exchange and negotiation must be recorded in writing by the parties.

2. In case the taxpayer proposes to apply a bilateral or multilateral APA, the taxpayer is responsible for notifying the related party within the scope of application of the APA to request the partner tax agency to contact and contact conducting exchange and negotiation with the General Department of Taxation.

During the process of bilateral and multilateral exchange and negotiation between the relevant tax authorities, if necessary and approved by the General Department of Taxation and the partner tax agency, the taxpayer may appoint a representative to attend. according to the invitation letter of the tax authority to explain related issues.

Tax authorities can notify taxpayers with summary information on the progress and results of negotiations; At the same time, taxpayers can be asked to explain relevant contents.

Article 9. Rights, obligations and responsibilities of taxpayers

1. Taxpayers' rights

a) The taxpayer has the right to request the General Department of Taxation to withdraw the application or stop the negotiation at any time before the APA is signed;

b) Taxpayers have the right to invite or hire independent experts who have skills and knowledge suitable to APA contents to participate in APA exchange and negotiation. In the documents recording the results of the exchange, the negotiation must be signed and certified by the taxpayer.

c) In the event that while implementing APA unilaterally, if there is a double taxation or an adjustment in taxable income leading to disadvantage for taxpayers resulting from the decision of the partner tax authority, Taxpayers have 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.

2. Obligations and responsibilities of taxpayers

a) Taxpayers are responsible for providing fully, timely, truthfully and accurately information and data to tax authorities during consultation (if any), submission of official dossiers, appraisal, negotiating, signing and implementing the APA as well as in the process of settling the request for extension or amendment of the APA according to the provisions of Article 97 of the Law on Tax Administration. Taxpayers are responsible before law for the truthfulness and accuracy of this information.

b) Taxpayers are obliged to keep relevant records and documents during the appraisal, negotiation, signing and implementation of APA and provide them to tax authorities upon request.

c) 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 distribution rate. supplementing profits as prescribed in APA to make corporate income tax declaration and payment according to regulations.

d) Taxpayers are responsible for making and submitting annual APA reports for each tax year and ad hoc reports (if any) during the effective period of the signed APA as prescribed in Clause 7 Article 41 of Decree No. Decree No. 126/2020/ND-CP.

dd) Taxpayers who commit tax administrative violations during the implementation of the signed APA will be sanctioned for tax administrative violations according to current regulations.

Article 10. Powers and responsibilities of tax authorities

1. Powers of tax authorities

a) The tax authority has the right to request the taxpayer to explain and clarify the information provided by the taxpayer during the processing of the application for APA.

b) The tax authority has the right to stop the negotiation when one of the following cases arises:

b1) The continuation of APA negotiation does not meet the principles of APA application specified in the Law on Tax Administration, Decree No. 126/2020/ND-CP and Article 5 of this Circular;

b2) The involved parties cannot agree on the content of the APA when the proposed period for the application of the APA ends;

b3) The taxpayer or the partner tax authority proposes to stop negotiating the APA.

The General Department of Taxation shall notify taxpayers (for unilateral APAs) or taxpayers and notify or confirm with foreign tax authorities (for bilateral or multilateral APAs) of the cessation of APA negotiations.

2. Responsibilities of tax authorities

a) Based on the authority prescribed in Article 41 of Decree No. 126/2020/ND-CP, the General Department of Taxation shall receive taxpayers' dossiers; handling the taxpayer's request on the application of APA, extension and amendment of the signed APA; cancel, revoke the signed APA.

b) Tax authorities are responsible for managing, inspecting and inspecting the implementation of signed APA by taxpayers according to the provisions of Clause 9 Article 20 of Decree No. 132/2020/ND-CP according to their functions and duties. assigned tasks, including: Inspecting, examining and determining the actual observance of the provisions of the signed APA; inspect, examine, determine the tax declaration and payment and adjust taxable income according to the provisions of the signed APA; checking and determining information in annual APA reports and ad hoc reports reported by taxpayers in accordance with arising reality.

The management, examination and inspection of the tax authorities is to monitor the compliance of taxpayers in the implementation of the signed APA, not to re-evaluate the signed APA.

c) The Tax Department participates in and is responsible for the contents involved in the process of consultation, exchange and negotiation of APA within the scope of its assigned state management; manage, examine and inspect the implementation of signed APAs according to the functions and tasks of the Tax Department.

Article 11. Information security

1. Tax authorities, taxpayers and relevant agencies are responsible for keeping information and data used during the processing of APA dossiers in accordance with regulations on confidentiality of taxpayer information in Article 99 of the Law on Tax Administration, relevant guiding documents and tax agreements.

2/ In case the APA dossier is terminated from negotiation, withdrawn, canceled or revoked, the information and data provided by the taxpayer in the official application for APA shall be explained in accordance with the provisions of law. requests, annual APA reports, ad hoc reports will not be used by the tax authorities as evidence or documents for the purposes of tax inspection, inspection or tax assessment for taxpayers.

In case the information and data provided by the taxpayer is the information and data already publicized by the taxpayer, the tax authority may continue to use it as a basis for determining the taxpayer's tax liability.

Article 12. Effect of APA

1. The signed APA will be binding on tax authorities and taxpayers.

2. The effective period of a signed APA is up to 03 tax years but does not exceed the actual number of years the taxpayer has engaged in production and business activities and declared and paid corporate income tax in Vietnam. .

Article 13. Enforcement

1. This Circular takes effect from August 03, 8, replacing Circular No. 2021/201/TT-BTC dated December 2013, 20 of the Ministry of Finance guiding the application of the Advance Agreement on method of determining taxable price (APA) in tax administration.

2. The application for application of APA submitted before the effective date of this Circular but has not been signed and the period of application for APA has not ended by the effective date of this Circular, the application shall continue to be processed. according to the provisions of the Law on Tax Administration, Decree No. 126/2020/ND-CP and this Circular.

3. In the course of implementation, if any problems arise, organizations and individuals are requested to promptly report them to the Ministry of Finance for study and settlement./.