On June 18, 2021, the Ministry of Finance issued Circular 45/2021/TT-BTC guiding the application of the prior agreement mechanism on the tax calculation method (APA) in tax administration for enterprises associated transactions. Accordingly, regulations on transactions proposed to apply APA are as follows:
– Transactions proposed to apply APA are related-party transactions specified in Clause 2, Article 1 of Decree 132/2020/ND-CP of the Government, specifically:
• Transactions as purchase, sale, bartering, renting, leasing out, borrowing, lending, transfer or disposal of commodities, provision of services;
• Transactions as financial borrowing, lending, financial services, financial guarantee, and other financial instruments;
• Transactions as purchase, sale, bartering, renting, leasing out, borrowing, lending, transfer or disposition of tangible assets, intangible assets; and
• Agreements on purchase, sale, and sharing of resources such as assets, capital, labor, and sharing of costs between related parties.
Exception: Business transactions in goods and services subject to price adjustments that the State makes under laws on prices.
– Transactions proposed to apply APA must simultaneously meet the following conditions:
• Actual transactions have arisen in the taxpayer’s production and business activities and will continue to take place during the APA application period.
• The transaction has a basis for determining the nature of the transaction, which determines the tax liability and a basis for analysis, comparison, and selection of independent comparables according to the provisions of Articles 6 and 7 of Decree No. 132/2020/ND-CP, based on information and data in compliance with the provisions of Point b, Clause 6, Article 42 of the Law on Tax Administration.
• The transaction is not subject to tax disputes or complaints.
• Transactions are made transparently, not for the purpose of evading, avoiding taxes, or take advantage of Tax Agreements.
Circular 45 takes effect from August 3, 2021, and replaces Circular 201/2013/TT-BTC dated December 20, 2013.
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