Nội dung toàn văn Official Dispatch 1990/CT-TTHT 2018 tax enterprises engaged in related-party transactions Ha Noi
GENERAL DEPARTMENT OF TAXATION
THE SOCIALIST REPUBLIC OF VIETNAM
Hanoi, January 15, 2018
To: Robinson Department Store (Vietnam) Joint Stock Company
(Address: Basement B1, Megamall, Royal City Urban Complex - 72A Nguyen Trai – Thanh Xuan District – Hanoi)
In response to the inquiry in Official Dispatch No. 01/RBSV-CV dated September 28, 2017 of Robinson Department Store (Vietnam) Joint Stock Company, Departments of Taxation of Hanoi answers as follows:
Pursuant to Clause 3 Article 8 of Decree No. 20/2017/ND-CP dated February 24, 2017 on tax administration for enterprises engaged in related-party transactions in terms of determination of costs for assessment of tax in certain specific cases for enterprises engaged in particular related-party transactions:
“Taxpayer’s total loan interest cost arising within a specified tax period qualified as a deduction from income subject to corporate income tax shall not exceed 20% of total net profit generated from business activities plus loan interest costs and amortization costs arising within that period.
This regulation shall not apply to taxpayers who are regulated entities of the Law on Credit Institutions and the Law on Insurance Business.
Taxpayers shall declare proportion of loan interest cost arising within a specified tax period according to the Form No. 01 hereto appended.”
Pursuant to Appendix II issued together with Circular No. 41/2017/TT-BTC dated April 28, 2017 of the Ministry of Finance on guidelines for Decree No. 20/2017/ND-CP dated February 24, 2017 on guidelines for declaration of form No. 01 regarding Information about related-party relationships and transactions:
“Item “Loan interest expenses”: Insert loan interest expenses included in financial expenses within a specified tax period.
+ Column (6): Insert total of value defined based on transfer pricing documentation, value defined based on the APA price in case of transactions arising between related parties and value of transactions with unrelated parties documented in accounting books.”
Accordingly, in the event that Robinson Department Store (Vietnam) Joint Stock Company engages in a related-party transaction, the company shall determine the deductible loan interest expense when determining taxable corporate income as prescribed in Clause 3 Article 8 of Decree No.20/2017/ND-CP In which the loan interest expense as determined is total of loan interest expense accruing within a specified tax period (irrespective of loan interest expense arising from related parties or unrelated parties).
If total net profit generated from business activities plus loan interest costs and amortization costs arising within a period (aka EBITDA indicator) is less than 0, total loan interest costs within the tax period is not deductible when determining taxable corporate income.
Difficulties that arise during the implementation of this Official Dispatch should be reported to Tax Inspection Office No. 1 for further guidelines.
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