What are responsibilities of banks in providing information on enterprises with related-party transactions in Vietnam from March 27, 2025?

What are responsibilities of banks in providing information on enterprises with related-party transactions in Vietnam from March 27, 2025?

Pursuant to Clause 2, Article 21 of Decree 132/2020/ND-CP (as amended by Clause 2, Article 1 of Decree 20/2025/ND-CP), responsibilities of banks in providing information on foreign loans and debt repayments of enterprises with related-party transactions are specified as follows:

The State Bank, within its duties and powers, is responsible for:

- Coordinating to provide information and data on foreign loans and repayments of specific enterprises with related-party transactions based on the list requested by the Tax Authority, including data on loan value, interest rate, interest payment terms, principal payment, actual capital withdrawal, debt payment (principal, interest), and other relevant information (if any).

- Coordinating to provide information as reported according to legal regulations on related persons of members of the Board of Directors, members of the Members' Council, members of the Control Board, General Director (Director), Deputy General Director (Deputy Director), and equivalent titles as prescribed in the charter of credit institutions; related persons of shareholders owning 1% or more of charter capital of the credit institution; affiliated companies of the credit institution according to the information management system of the State Bank when requested by the tax authority.

What are responsibilities of banks in providing information on enterprises with related-party transactions in Vietnam from March 27, 2025? (Image from the Internet)

Vietnam: What do databases used for declaration, determination and management of transfer prices include?

Pursuant to Article 17 of Decree 132/2020/ND-CP, the databases used for declaration, determination and management of transfer prices are specified as follows:

(1) Databases used in declaring, determining transfer prices of taxpayers include:

- Commercial databases are financial, economic information collected, aggregated, standardized, stored, updated, and provided by data business organizations through software supporting access, management with pre-programmed tools and applications, providing utilities for users to search, access, and use financial, economic data of businesses inside and outside Vietnam by business sector, geographical area, or other search criteria serving the purpose of comparison, determining similar subjects in declaring and managing transfer prices;

- Publicly disclosed information of enterprises on the stock market;

- Information, data published on domestic and international commodity, service exchanges;

- Information published by domestic ministries and central authorities or other official sources.

(2) Databases used in managing transfer prices by tax authorities include:

- The database specified in Clause 1, Article 17 of Decree 132/2020/ND-CP;

- Information, data exchanged with partner tax authorities as stipulated in Clause 7, Article 4 of Decree 132/2020/ND-CP;

- Information provided by domestic ministries and central authorities to tax authorities;

- The database of the tax authority in risk management.

(3) Analyze the selection of independent comparable subjects to analyze, determine the independent transaction range in compliance with the analysis, comparison principles, and transfer prices determination methods prescribed in Decree 132/2020/ND-CP, prioritizing data comparison selection as follows:

- Internal comparable subjects of the taxpayer;

- Comparable subjects residing in the same country or territory as the taxpayer;

- Subjects in countries in the region with similar industrial conditions and economic development levels.

In cases of selecting foreign comparable subjects in other geographical markets, the similarity and significant qualitative and quantitative differences must be analyzed according to the provisions of Article 9 and Article 10 of Decree 132/2020/ND-CP.

When are taxpayers exempt from declaring, compiling transfer prices documentation in Vietnam?

Pursuant to Article 19 of Decree 132/2020/ND-CP stipulating the cases in which taxpayers are exempt from declaring, compiling transfer prices documentation as follows:

- Taxpayers are exempt from declaring transfer prices as stated in Section III, IV, Appendix I issued with Decree 132/2020/ND-CP, exempt from compiling transfer prices documentation according to the provisions of this Decree when only transactions with related parties are subject to corporate income tax in Vietnam, applying the same corporate income tax rate as the taxpayer, and neither party enjoys corporate income tax incentives during the tax period, but must declare the exemption grounds in Section I, II in Appendix I issued with Decree 132/2020/ND-CP

- Taxpayers are required to declare transfer prices as per Appendix I issued with Decree 132/2020/ND-CP but are exempt from compiling transfer prices documentation in the following cases:

+ Taxpayers with related-party transactions but total annual revenue under VND 50 billion and total related-party transactions under VND 30 billion during the tax period;

+ Taxpayers who have entered into an Advance Pricing Agreement (APA) shall submit an Annual Report according to legal regulations on Advance Pricing Agreements. Related-party transactions not covered by the APA require taxpayers to declare transfer prices according to Article 18 of Decree 132/2020/ND-CP.

- Taxpayers conducting business with simple functions, not generating revenue, costs from exploiting, using intangible assets, with revenue below VND 200 billion, applying a net profit margin before interest and corporate income tax (excluding financial revenue and cost differences) on net revenue, including fields such as:

- Distribution: 5% or more;

- Manufacturing: 10% or more;

- Processing: 15% or more.

In cases where taxpayers separately monitor and account for the revenue, costs of each field, the net profit margin before interest and corporate income tax on net revenue shall be applied corresponding to each field.

For taxpayers monitoring, accounting separately for revenue but not for costs of each field in production, business activities, costs shall be allocated according to the revenue ratio of each field to apply the net profit margin before interest and corporate income tax on net revenue corresponding to each field.

In cases where taxpayers do not monitor, account separately for revenue and costs of each field to determine the net profit margin before interest and corporate income tax corresponding to each field, the highest net profit margin before interest and corporate income tax on net revenue of that field shall be applied.

Taxpayers not applying the net profit margin as prescribed in this point are required to compile transfer prices documentation according to the regulations.

- Taxpayers exempt from declaring, compiling transfer prices documentation according to Clause 1, Clause 2, Article 16 of Decree 132/2020/ND-CP, the determination of total deductible interest expenses when determining taxable corporate income of enterprises with related-party transactions shall be implemented according to Clause 3, Article 16 of Decree 132/2020/ND-CP.