Problems surrounding regulations governing linked transactions

According to the representative of Hai Thanh Co., Ltd., doing business in the field of wholesaling materials and equipment installed in construction, headquartered in Cau Nghin industrial cluster, Hung Nhan commune, Vinh Bao district, city. In Hai Phong, businesses borrow from banks with an amount greater than 25% of charter capital and account for 50% of medium and long-term loans.

However, company accountants are very concerned because the regulations clearly state two conditions when declaring associated transactions, which is that the enterprise borrows capital from a party that directly or indirectly participates in operating and controlling contributions. capital or investment. Along with that, the loan amount is more than 25% of the owner’s capital contribution and accounts for 50% of medium and long-term loans. However, this accountant said that the bank does not participate in the management or any activities of the company. Furthermore, the high increase in interest costs last year has made it more difficult for businesses, because the 30% interest cost ceiling is restrictive.


Looking back at 7 years of applying the interest expense ceiling, Mr. Pham Quoc Viet, Director of MACT Vietnam Co., Ltd., operating in the field of tax, accounting and legal consulting, assessed through tax periods, The policy has a great effect in screening businesses with weak health due to “thin capital, virtual capital” of the economy.

ÔPham Quoc Viet, Director of MACT Vietnam Co., Ltd.
Mr. Pham Quoc Viet, Director of MACT Vietnam Company Limited.

“Regulating the ceiling on loan interest expenses also helps prevent and arrange sophisticated and complex financial transactions, causing the erosion of tax revenue from arranged transactions with large interest expenses during the tax period.”

In addition, regulations controlling the ceiling on deductible interest expenses also help Vietnam strengthen management of loans and financial transactions and help Vietnam’s tax environment become more and more suitable for businesses. International practice, when the Organization for Economic Cooperation and Development (OECD) recommended ceiling interest expense is from 10 – 30% of earnings before interest, taxes and depreciation (EBITDA).

Although the promulgated policy brings many positive things, right from the first promulgation in Decree 20/2017/ND-CP dated February 24, 2017 on management of affiliated transactions, this regulation encountered reactions. harshness from the business side.

Until 2020, the Ministry of Finance agreed to amend the regulations with three concessions in Decree No. 132/2020/ND-CP dated November 5, 2020 (Decree No. 132), including: raising the cost ceiling Loan interest from 20% to 30%; Allowing accumulation for 5 years instead of the end of each year, calculating that year and allowing retroactive tax period from 2017, the reflections of businesses have temporarily subsided.

But recently, problems with interest expense ceilings have arisen again when market interest rates have skyrocketed. Experts say that the interest expense ceiling is one of the most controversial regulations in the tax industry. The vast majority of Vietnamese businesses are eliminated interest costs but there is no transfer pricing factor, not even a linkage factor like in the case of bank loans.

Accordingly, one of the problems most reported by businesses is determining the linkage relationship based on loan capital at Point d, Clause 2, Article 5 of Decree 132: “An enterprise guarantees or lends capital to another enterprise in any form (including loans from third parties secured from the financial resources of the affiliated party and documented financial transactions). similar substance) with the condition that the loan capital is at least equal to 25% of the capital contribution of the owner of the borrowing enterprise and accounts for over 50% of the total value of medium and long-term debts of the borrowing enterprise.

Thus, this regulation includes cases where banks lend to businesses.

Reality shows that many businesses rely heavily on loans, so interest costs often account for a large proportion in the cost structure.

Meanwhile, Decree 132 stipulates that interest expenses of enterprises with associated transactions must not exceed 30% of the enterprise’s EBITDA. Expenditures exceeding the above ratio are non-deductible expenses when determining income subject to corporate income tax

According to Mr. Nguyen Minh Duc, Legal Department of the Vietnam Confederation of Commerce and Industry (VCCI), the reason businesses reacted was due to real bank debt, money to be paid to real banks, both sides also did not intentionally push up interest rates to avoid taxes, but because real interest rates in the market increased sharply. The absurd consequence is when a business incurs large losses but still has to pay corporate income tax.


According to the Ministry of Finance, the financial potential of many businesses is exhausted after the pandemic, so the need for bank loans to restore production and business activities after the epidemic is very large. .

This causes interest costs to serve the production and business activities of businesses to increase, leading to many cases where businesses have associated transactions that incur loan interest costs that cannot be deducted when determining taxable income. Corporate income tax.

In particular, BOT enterprises often borrow up to 80% of their capital from banks, so when BOT enterprises are limited in interest costs, it affects the financial plan to recover capital that the enterprise has approved.

Therefore, many businesses sent petitions to the Prime Minister, the Government Office, and the General Department of Taxation about problems with related transaction regulations such as: BOT Dai Duong Joint Stock Company, BOT Pha Joint Stock Company. Again, Tasco Hai Phong Company Limited, Soc Trang Highway 1 BOT Company Limited, Hai Nam Seafood Company Limited, 545 Construction Joint Stock Company…

Besides the problems caused by the 30% interest cost ceiling for businesses borrowing bank capital mentioned above, many accountants also lament that revenues collected and paid on behalf of affiliated parties such as electricity and water bills must also be declared. link translation.

Business accountants also have difficulty determining whether their business has related relationships and transactions or not, and struggle to determine the transfer price of goods to parties with related relationships. Therefore, every time the corporate income tax finalization period approaches, many businesses do not dare to submit final settlement reports because of declaring associated transactions.

Statistics from the General Department of Taxation (Ministry of Finance) show that after nearly 3 years of implementing Decree No. 132, through inspection of businesses with associated transactions from 2020 to present, tax authorities have handled 96,987 .74 billion VND.

Because many accountants are still quite vague about declaring related party transactions, tax authorities have recently caught many errors and collected taxes.

Statistics from the General Department of Taxation (Ministry of Finance) show that after nearly 3 years of implementing Decree No. 132, through inspection of businesses with associated transactions from 2020 to present, tax authorities have handled 96,987 .74 billion VND.

Of which, arrears, refunds and fines are 6,964.58 billion VND; Deduction reduction of VND 199.18 billion; Reduced loss by 68,359.63 billion VND and adjusted to increase taxable income by 21,464.35 billion VND.

After many years of supporting, tax and accounting consulting for hundreds of businesses, Mr. Pham Quoc Viet also noticed 5 difficulties for businesses in the process of applying Decree 132.

One, Securities companies have margin transactions (margin lending) which are activities licensed by the State Securities Commission, similar in nature to bank credit activities.

However, securities companies are not subject to the regulations on deductible loan interest ceilings when calculating corporate income tax (exemption for subjects applying the Law on Credit Institutions, Insurance Business Law). This causes difficulties in the operations of securities companies.

Twodifficulties for corporations operating under the parent company-subsidiary model when the parent company borrows and relents to the subsidiary, because the subsidiaries often do not have enough capacity and reputation to borrow capital. from banks…

The content of the article was published in Vietnam Economic Journal No. 51-2023 published on December 18, 2023. Dear readers, we invite you to read here This: Kinh-te-viet-nam

Problems surrounding regulations on management of affiliated transactions - Photo 1

Trả lời

Email của bạn sẽ không được hiển thị công khai. Các trường bắt buộc được đánh dấu *