More regulations on determination of related-party transactions proposed

The Ministry of Finance (MOF) is working to revise Decree No. 132/2020/ND-CP, adding regulations regarding the determination of related-party transactions between enterprises and credit institutions.

As per the draft, a related party of a credit institution is an enterprise that directly or indirectly holds at least 20 percent of the charter capital of a credit institution.

Both the enterprise and the credit institution have at least 20 percent of the charter capital held directly or indirectly by a third party.

The State Bank of Vietnam would have to provide information for tax authorities if being required to determine enterprises with related-party transactions. The information includes foreign loans and debt repayments of each specific enterprise with related transactions, data on loan turnover, interest rates, interest and principal payment periods and actual capital withdrawals and debt repayments.

According to the MOF, the draft decree is designed in conformity with the newly-issued Law on Credit Institutions, which is expected to contribute to fighting against transfer pricing

By: VLLF