Decree on Transfer Pricing Works Effectively

10:19:38 AM | 7/13/2020

Decree 20/2017/ND-CP is the first decree-level legal document on tax administration for affiliate transactions. After three years of enforcement, the Decree has achieved certain successes in the fight against transfer pricing.

In 2017 and 2018, more than 11,000 enterprises declared their affiliate transactions each year, of which foreign-invested enterprises accounted for about 64%. Among companies that declared their affiliate transactions, 6,604 companies had transactions in 2017 and 7,785 companies in 2018, rising 18% year on year. Foreign-invested companies accounted for about 85%.

On tax collection, since 2017, tax collected from affiliate transactions amounted at over VND11 trillion, including over VND2 trillion from tax in arrears and fines.

The application of the regulation on control of deductible interest expenses when determining taxable corporate income tax is aimed to block and thoroughly prevent profits, found after the fight against transfer pricing, from being disabled by interest rate tools, and has been effective.

Source: Vietnam Business Forum