GUIDANCE ON SEVERAL ARTICLES REGARDING TAX ADMINISTRATION OF TRANSFER PRICING IN ENTERPRISES
Global Tax Update:July 2017/Vietnam
On 15 June 2017, the Ministry of Finance officially issued Circular No. 41/2017/TT-BTC dated 28 April 2017 (“Circular 41”) providing detailed guidance on the implementation of Article 6, 7, 10, 11 of Decree 20/2017/ND-CP dated 24 February 2017 issued by the Government on transfer pricing in enterprises (“Decree 20”), attached with 03 Appendices: (Global Tax Update: July 2017/Vietnam)
- Appendix I – Formula of Interquartile range calculation and the median value;
- Appendix II – Detailed guidance to declare Form 01 of Decree 20 – Information on related party relations and related party transactions; and
- Appendix III – Detailed guidance to declare Form 04 of Decree 20 – Declaration on reported information about transnational profit.
Circular 41 takes effect on 1 May 2017, replacing Circular 66/2010/TT-BTC dated 22 April 2010 (“Circular 66”) of the Ministry of Finance providing information on the determination of market prices in business transactions between related parties and Form 03-7/TNDN enclosed with Circular 156/2013/TT-BTC dated 06 November 2013 of the Ministry of Finance.
In this alert, we highlight the important guidance and requirements in Circular 41 to which taxpayers should pay attention to ensure compliance with transfer pricing regulations:
(1) HIGHLIGHTS ON THE COMPARABILITY ANALYSIS AND SELECTION OF COMPARABLES
(2) TAXPAYERS’ OBLIGATIONS IN THE DECLARATION OF RELATED PARTY TRANSACTIONS AND THE PREPARATION OF TRANSFER PRICING DOCUMENTATION REPORTS
(3) CHANGES IN TRANSFER PRICING DECLARATION FORM
(4) GUIDANCE ON THE ALLOCATION OF REVENUES AND EXPENSES TO CALCULATE THE OPERATING MARGIN FOR EXEMPTION FROM PREPARATION OF TRANSFER PRICING DOCUMENTATION REPORTS.
(5) Deloitte VIETNAM’S POINT OF VIEW