Decree No. 132/2020/ND-CP regulating tax management for enterprises with associated transactions takes effect from December 20, 2020 and is applied from the corporate income tax period of the year 2020 has many new points compared to previous regulations.
1.Adjusting regulations on submitting cross-national profit reports to be consistent with international practices, convenient for taxpayers: the time to prepare cross-country profit reports is no later than 12 months after the end of the fiscal year of the company. The supreme parent company adopts the form of automatic information exchange if the competent authorities of the two countries sign an agreement. Therefore, taxpayers only have to provide this report to the tax authority in the absence of the above agreement.
2. Add a number of subjects that are excluded when applying regulations limiting loan interest expenses for businesses with associated transactions: including official development assistance (ODA) loans, preferential loans of the Government implemented in the method of the Government borrowing foreign loans to on-lend to businesses; Loans for implementing national target programs (new rural programs and sustainable poverty reduction); Loans for investment in programs and projects implementing the State's social welfare policies (resettlement housing, worker and student housing, social housing and other public welfare projects).
3.Supplementing regulations on parties with associated relationships: Enterprises have transactions of transfer or receipt of capital contribution of at least 25% of the enterprise's owner's capital contribution during the tax period; Borrow or lend at least 10% of the owner's capital contribution at the time of the transaction in the tax period with an individual who operates or controls the enterprise or with an individual in an affiliated relationship according to regulations. specified at Point g, Clause 2, Article 5 of the Decree.
4. Allow non-deductible interest expenses to be transferred to the next tax period: allow the portion of loan interest expenses that exceeds the 30% control limit to be transferred to the next tax period when determining the total deductible interest expenses. except in case the total deductible interest expense of the next tax period is lower than the prescribed level of 30%. The period of transfer of loan interest expenses shall be calculated continuously for no more than 05 years from the year following the year in which non-deductible loan interest expenses arise.