Instructions about execution of the mechanism for APA with enterprises involved in related-party transactions

Transactions proposed to apply APA are related-party transactions specified in Clause 2, Article 1 of Decree 132/2020/NĐ-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.

In addition, the transaction must simultaneously satisfy the following conditions:

• Actual transactions arise in the taxpayer's production and business activities and will continue to take place during the period of application of APA.
• Transactions have any basis for determination of the nature of transaction deciding tax liability, and any basis for analysis, comparison and selection of independent comparables according to the provisions of Articles 6 and 7 of Decree No. 132/2020, based on information and data in compliance with the provisions of Point b, Clause 6, Article 42 of the Law on Tax Administration.
• Transactions are not involved in tax disputes or complaints.
• Transactions are made in a transparent manner, not for the purpose of tax evasion, avoidance, abuse or misuse of Tax Agreements.

Circular No. 45/2021/TT-BTC takes effect from August 3rd, 2021, and replaces Circular 201/2013/TT-BTC.

The information on principle, dossier, procedure, right and responsibility of the tax payer and tax authority in application of APA will be update in Crowe Vietnam’s later newsletter.