Accordingly, Decree 132 has defined the general principle of associated parties including: one party directly and indirectly participates in the management, control, capital contribution to the other party, or the parties directly or indirectly participate in the management, control, and capital contribution of another party. At the same time, the taxpayer will compare if it is within the scope of the Decree application or not and state management agencies can control the associated enterprises, prevent price transfer phenomenon. The decree specific cases identified as affiliated parties, including 11 cases. In which, there are 4 cases of capital association; 5 cases linked through the administration and control; 2 other link cases.
Regarding the regulations for the commercial database used in the declaration and determination of transfer pricing, on the basis of summarizing the practice of tax administration applicable to enterprises with associated transactions in Vietnam and inherited of international experience, Decree 132 has detailed regulations: “Commercial databases are financial and economic information, collected, gathered, standardized, store, update by data trading organizations, provide by supporting software to access, manage with pre-programmed tools and applications, support utilities for users to search, access and use data finance and economics of enterprises inside and outside Vietnam according to business lines, geographical areas, or other required search criteria for the purpose of comparing and identifying similar objects in related transaction price declaration and management”. At the same time, the tax authority's database is supplemented to include databases and information exchanged with foreign authorities, not just information and data collected, constructed and managed by the tax authorities as in Decree 20/2017/ND-CP.
In addition, the provisions for transfer pricing documentation and information exchange for inter-country profit reports have also been amended, in order to be in line with international practices. Because at present, the submission of cross-border profit statements of supreme parent companies has been agreed to apply by BEPS member countries in management policies and towards an automatic information exchange in the period of 2019-2020. Therefore, Decree 132 has specified in detail the cases in which taxpayers in Vietnam have a foreign parent company are obliged to prepare inter-national profit reports and submit them to tax authorities in Clause 5, Article 18. Decree 132 also provides detailed provisions on taxpayers' obligations in declaring and determining the price of associated transactions; responsibilities of state agencies in tax management, examination and inspection for taxpayers that have related transactions.
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