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

The Ministry of Finance issues the Circular No. 45/2021/TT-BTCdated June 18, 2021, providing guidance on execution of the Advance Pricing Agreement (APA) mechanism used in the tax administration of enterprises involved in related-party transactions.

This document defines transactions to which the APA mechanism is applied as follows:

– Transactions to which the APA mechanism is applied are related-party transactions specified in Clause 2, Article 1 of the Government’s Decree No. 132/2020/ND-CP.

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

(Currently, transactions eligible for the APA mechanism are business transactions between related parties, except for business transactions related to goods and services requiring price stabilization within the scope of the State’s regulations on prices).

– Transactions to which the APA mechanism is applied must fully 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.

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

Circular No. 45/2021/TT-BXD is entering into force as of August 3, 2021, replacing the Circular No. 201/2013/TT-BTC dated December 20, 2013.

 

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