Name of recommendations: Recommendation on providing more information channels, so that enterprises can easily obtain data on determination of annually associated transaction’s prices according to the Decree No. 20/2017 / ND-CP.

Status: Has not been responded

Recommended by units: The Small and Medium Business Support Center – VCCI

Official letter: No 0707/PTM - VP, dated: 2018-04-12

Recommended contents:

The Decree No. 20/2017 / ND-CP regulating tax management for enterprises having associated transactions (the Decree No. 20) has taken effect from 1 st May 2017 and replaces Circular 66/2010 / TT-BTC. The Decree No 20 marks the significant milestone in the legal system of associated transaction’s prices in Vietnam during the past 10 years, reflecting Vietnam's commitment to developing tax policies that be consistent with the global tax policy framework. The Decree No 20 is based on the Circular No 66 and extends the scope of interpretation to a number of existing regulations while introducing a number of new concepts and principles under the OECD’s Guidelines and the action programs.of the global tax policy framework. The Decree 20 provides a strong and more general legal framework for tax administration to businesses with associated transactions.

However, during the implementation period, some joint venture enterprises encountered when compiling the transaction’s prices determination of enterprises in Vietnam are: Lack of database used to declare, determine and manage prices of associated transactions. Although Article 9 (1) sets out the sources for which taxpayers are referring, these data sources are incomplete. For example, due to the lack of a local database, taxpayers will lack a basis for referencing when determining prices in the associated transitions as guided by the new decree. For example: PREX Co., Ltd, the Lao Son Industrial Group, Do Luong, Nghe An. Prex Company, a subsidiary company of the KIDO Korea, specializes in producing textiles and leather footwear. So far, the main source of information that the company can refer to determine the associated transaction’s prices is the financial statements of companies listed on the stock market: The Binh Dinh Shoe Joint Stock Company, Thuong Dinh Shoes Joint Stock Company, Saigon Shoes Joint Stock Company. However, the scale and products of these companies are not really close to the PREX Company at the same time, these companies have temporarily stopped producing some items, therefore It is more difficult for PREX Company  to have reference information.

Therefore, we would like to request tax authorities to provide detailed guidance on the channels of information so that enterprises can easily obtain data for determination of associated transaction prices annually.