Against Transfer of price: only domestic enterprises "complaint", FDI enterprises not?

VCN- At the conference on policy and tax administrative procedures in 2018, which took place on November 27 in Hanoi, representatives of enterprises said that Decree 20/2017 / ND-CP Decree 20, on tax management with businesses having associated transactions are causing many difficulties for enterprises. However, the General Directorate of Taxation affirmed that the regulations were made on the basis of the survey and fully in line with international practices.
against transfer of price only domestic enterprises complaint fdi enterprises not FDI attraction exceeded US$ 30 billion
against transfer of price only domestic enterprises complaint fdi enterprises not FDI sector has a trade surplus of nearly US$ 27 billion
against transfer of price only domestic enterprises complaint fdi enterprises not Export exceeded 200 billion USD, nearly reached 71% turnover by FDI companies
against transfer of price only domestic enterprises complaint fdi enterprises not
Mr. Cao Anh Tuan replied at the Tax Policy and Customs Dialogue Conference 2018.

Impact on some companies operating under the mother-child model

Speaking at the meeting, Vu Thi Ngoc Anh, tax department of Vingroup, said that the goal of Decree 20 is to prevent tax losses in Vietnam due to the impact of transfer of price between countries, but In fact, Decree 20, especially Item 3, Article 8 of the Decree, has a lot of impact on domestic enterprises, especially corporations operating under the model of mother and child. According to the decree (effective from May 2017), the total interest expense of businesses is deducted when determining taxable income of enterprise cannot exceed 20% of total net profit. This means that interest expenses in excess of 20% will be considered unreasonable and taxable.

A representative from Vingroup said, "Our group is investing in capital-intensive industries such as high-tech agriculture, education, heavy industry, so it can not generate any profits right away. Thereby, at the beginning of period, Vingroup’s projects are not able to obtain bank loans themselves, the capital has to be ratified by the parent company of the group. Expense of loans is not deductible when calculating taxable income. This causes businesses to be affected."

Mrs. Vu Thi Ngoc Anh proposed that the provisions in Decree 20 are temporarily not applied and corrected in accordance with the situation of Vietnam.

Also related to Decree 20, Le Thi Ngoc Tram, Chief Accountant of Vietnam Joint Stock Commercial Bank for Foreign Trade (Vietcombank) said that this unit only generates related transactions in lease activities of renting office with its parent company of Vietcombank. Interest expenses come from independent parties, not affiliates. According to Mrs. Tram enterprise income tax of parent company and securities company is 20%, so the transfer of price is almost none. At the same time, she said the company still has to pay interest and must declare and pay additional taxes. Therefore, the company's suggestion is to soon consider adjusting the interest rate controls of 20% as current regulations.

It is difficult to own a policy

Answering enterprises’ queries; Cao Anh Tuan, deputy head of the General Department of Taxation, said that Decree 20 was implemented on the basis of the recommendations of the OECD and G20 countries asking countries to focus on price transfer and revenue erosion. According to Tuan, countries make recommendations on controlling interest expenses between 10-30%. Vietnam considered and selected 20%. This decision is based on the survey of 12,000 corporations around the globe.

"The lending between the parties and loans to independent parties must be treated equally." This was done in the UK in the 2000s, and as a result the entire multinational companies in the country restructured its loans through intermediary banks to avoid regulation, which has led to serious consequences, so it is the reason why regulation not only controls interest expenses on linked transactions, but also independent transaction," Tuan stressed. Mr. Cao Anh Tuan also added that all multinational companies have restructured their debt through intermediary commercial banks, in particular associated companies, parent companies into back-to-back loans to completely avoid, neutralize the above rules. And Vietnam has recorded such cases. Leaders of the tax branch asked: Why are any FDI enterprises doing business in Vietnam not complaining about this issue? According to him, the authorities have surveyed thousands of FDI enterprises which are subsidiaries of multinational companies based in Vietnam and have not received any written recommendations.

against transfer of price only domestic enterprises complaint fdi enterprises not Need strong penalties for transfer pricing

VCN - Although there has been great effort in anti-transfer pricing , but look back in the past ...

Explaining this issue, according to Mr. Cao Anh Tuan, it is because they know this is a global game. "We have to go to the global game, we cannot stand outside, we want to do business globally but we want our own policy, it is difficult to control the current situation not only to help the financial situation of the business, but also all of the economy," said the head of the General Department of Taxation. Particularly for the impact, the Deputy General Director of the General Department of Taxation released the figure, out of more than 600,000 operating enterprises, more than 4,500 enterprises having associated relations must declare under Decree 20. Of the more than 4,500 enterprises, about 423 units exceeded the ceiling of 20%, i.e. less than 1% of enterprises are operating.

By Quang Hung/Bui Diep

Related News

Enterprises focus on Tet care for employees

Enterprises focus on Tet care for employees

VCN - Tet bonuses are always an issue that receives special attention from employees at the end of each year. This year, the economy is facing many difficulties, many enterprises in the southern provinces have announced Tet bonuses, reflecting their tireless efforts to ensure the rights of employees.
Numerous FDI enterprises face suspension of customs procedures due to tax debt

Numerous FDI enterprises face suspension of customs procedures due to tax debt

VCN - Several foreign direct investment (FDI) enterprises in HCM City have been subjected to coercive measures, including the suspension of customs procedures, for overdue import-export and domestic tax liabilities.
Enterprises face difficulties in tax refunds due to partners closing

Enterprises face difficulties in tax refunds due to partners closing

VCN - On December 13, at a dialogue conference on tax and customs policies and administrative procedures organized by the Ministry of Finance in coordination with the Vietnam Chamber of Commerce and Industry (VCCI), enterprises proposed solutions to many problems related to tax policies such as VAT refunds, tax declaration procedures, electronic invoices, etc.
Answering many questions from businesses at dialogue conference on tax and customs policies

Answering many questions from businesses at dialogue conference on tax and customs policies

VCN - Many opinions and recommendations related to tax and customs issues were raised by the business community at the dialogue on tax and customs policies and administrative procedures in 2024, organized by the Ministry of Finance.Representatives of the Ministry of Finance, the General Department of Taxation, and the General Department of Customs provided specific responses, and affirmed that they will continue to research and advise on the assessment, review, and amendment and supplementation of appropriate regulations.

Latest News

Ensuring financial capacity of bonds issuers

Ensuring financial capacity of bonds issuers

VCN - The Ministry of Finance is finalizing the draft Decree amending and supplementing Decree No. 155/2020/ND-CP detailing the implementation of a number of articles of the Securities Law. The amendment aims to continue to perfect the legal framework and overcome some shortcomings arising in the practice of the securities market.
Finance ministry announces five credit rating enterprises

Finance ministry announces five credit rating enterprises

One more company has been granted the certificate of eligibility since August.
The capital market will see positive change

The capital market will see positive change

VCN – Vietnam’s capital market has more balanced, harmonious and sustainable. However, besides the achievements, the market still faces many potential challenges. In order for the capital market to become an effective and sustainable capital mobilization channel, further improving the quality of goods and diversifying investors in the market is a key direction.
Corporate bond issuance value rises by 60 per cent

Corporate bond issuance value rises by 60 per cent

In the first 11 months of 2024, the total value of corporate bond issuances reached nearly VNĐ403 trillion, a 60 per cent increase year-on-year.

More News

Slower mobilization than credit may put pressure on interest rates

Slower mobilization than credit may put pressure on interest rates

VCN - According to the latest data from the State Bank of Vietnam (SBV), deposits in the banking system as of the end of September 2024 reached more than 14 million billion VND, an increase of 4.9% compared to the beginning of the year, but the rate was still slower than credit, which could put pressure on interest rates.
Fed’s foreseen rate cuts affect foreign exchange rate

Fed’s foreseen rate cuts affect foreign exchange rate

After the Fed’s move, the US dollar index (DXY) on December 19 hit nearly 108, the highest level in the past year.
Untying the knot for green finance

Untying the knot for green finance

VCN - Green finance is a crucial resource for greening businesses. Completing the policy framework for green finance is urgently needed to unlock this capital flow.
Ensuring efficiency and transparency in use and management of houses and land at State enterprises

Ensuring efficiency and transparency in use and management of houses and land at State enterprises

VCN - According to the Ministry of Finance, the issuance of Directive on strengthening management, improving the efficiency of use and handling of houses and land at State-owned enterprises to ensure the effective management, use and handling of houses and land for the right purposes, and to avoid loss and waste.
Vietnam

Vietnam's stock market to develop strongly and sustainably

VCN - This was emphasized by Minister of Finance Nguyen Van Thang at the Conference to review the work of 2024 and deploy the work of 2025 of the State Securities Commission (SSC) held on the afternoon of December 18.
Tax sector achieves revenue target of about VND1.7 million billion

Tax sector achieves revenue target of about VND1.7 million billion

VCN – Motivated by the revenue collection by the end of December 2024, the General Department of Taxation has accomplished the revenue collection.
General inventory of public assets raises efficiency of use and management of country

General inventory of public assets raises efficiency of use and management of country's resources

VCN – The implementation of the General Inventory Project by the Ministry of Finance, ministries, central and local agencies has ensured progress according to Project 213 and the plan issued by the Ministry of Finance. This is the information provided by a representative of the Department of Public Asset Management (Ministry of Finance) at the press conference on the implementation of the General Inventory Project of public assets organized by the Ministry of Finance on the afternoon of December 18.
Publicizes progress of public investment disbursement for important national projects

Publicizes progress of public investment disbursement for important national projects

VCN – Important national projects, inter-regional transport projects, riverbank and coastal erosion treatment projects all have disbursement rates lower than the estimated average disbursement rate of the whole country, the Ministry of Finance said.
Six SOEs to be transferred back to industry ministry

Six SOEs to be transferred back to industry ministry

Six State–owned enterprises (SOEs) with a total State stake of 800 trillion VND (31.5 billion USD) will be transferred back to the Ministry of Industry and Trade (MoIT) after six years under the management of the Commission for the Management of State Capital at Enterprises (CMSC).
Read More

Your care

Latest Most read
Ensuring financial capacity of bonds issuers

Ensuring financial capacity of bonds issuers

VCN - The Ministry of Finance is finalizing the draft Decree amending and supplementing Decree No. 155/2020/ND-CP detailing the implementation of a number of articles of the Securities Law. The amendment aims to continue to perfect the legal framework and
Finance ministry announces five credit rating enterprises

Finance ministry announces five credit rating enterprises

One more company has been granted the certificate of eligibility since August.
The capital market will see positive change

The capital market will see positive change

VCN - The capital market is an important component of the financial market that provides medium-and long-term capital, contributing to effectively mobilizing and allocating resources and creating an essential material foundation for the grow of national e
Corporate bond issuance value rises by 60 per cent

Corporate bond issuance value rises by 60 per cent

In the first 11 months of 2024, the total value of corporate bond issuances reached nearly VNĐ403 trillion, a 60 per cent increase year-on-year.
Slower mobilization than credit may put pressure on interest rates

Slower mobilization than credit may put pressure on interest rates

According to the latest data from the State Bank of Vietnam (SBV), deposits in the banking system as of the end of September 2024 reached more than 14 million billion VND
Mobile Version