Vietnam: To introduce new regulations on tax administration for enterprises performing related-party transactions

According to Vietnam's Official Dispatch 271/TCT-TTKT, by introducing new regulations of the Decree 132/2020/ND-CP, Vietnam General Department of Taxation requests Departments of Taxation to take action immediately to communicate, disseminate and notify them to local tax collecting officers and taxpayers for their information. Some notable new points in Decree 132/2020/ND-CP are mentioned as follows:

• Adding the definition of “Agreement of competent regulatory authorities”, “International tax agreement” and “Authorized reporting entity”;

• Amending and supplementing regulations regarding "Database of the Tax Authority";

• Amending and supplementing regulations regarding the standard arm’s length range;

• Amending and supplementing regulations regarding related parties;

• Upholding the Vietnam's Decree 68/2020/ND-CP, amending and supplementing clause 3 of Article 8 in the Decree 20/2017/ND-CP, regulating deductible loan interest costs and adding exceptions to the regulations on limits to costs of interest on loans used for investment in the State-funded social welfare programs and projects for social housing development.;

• Amending and supplementing regulations regarding submission of international or country-by-country reports;

• Adding regulations on responsibilities and powers of tax authorities in management of prices of related-party transactions.

In addition, Vietnam's Official Dispatch 271/TCT-TTKT also clearly states that Vietnam's Decree 132/2020/ND-CP is not guided by any Circular unlike Vietnam's Decree 20/2017/ND-CP

Details of each new content can be found in Official Letter 271/TCT-TTKT, issued on January 27, 2021.

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