Tax Calculation Costs for Businesses Having Related Transactions in 2024

Pursuant to Article 16 of Decree 132/2020/ND-CP, there are 3 common types of tax cost calculation methods for businesses with associated transactions:

A/ Tax calculation costs for related party transactions that are not consistent with the nature of independent transactions or do not contribute to generating revenue

Not included in deductible expenses when determining taxable income for corporate income tax in the period, including payments to related parties:

(1) Do not carry out any related production or business activities; has no related rights or responsibilities for assets, goods or services provided to taxpayers.

(2) There are production and business activities but the scale of assets, number of employees and production and business functions are not commensurate with the transaction value.

(3) Be a resident of a country or territory that does not collect corporate income tax and does not contribute to generating revenue or added value to the taxpayer's production and business activities.

B/ Tax calculation costs for service costs between affiliated parties

In addition to the expenses specified in the second bullet point, Clause 2, Article 16 of Decree 132/2020/ND-CP, taxpayers can deduct service expenses if they meet the following conditions:

(1) Services provided have commercial, financial, economic value and directly serve production and business activities; services from identified affiliates provided; Service fees are paid on the basis of the principle of independent transactions and the method of calculating associated transaction prices or distributing service fees must be applied uniformly throughout the group for similar types of services and Taxpayers must provide contracts, documents, invoices and information on calculation methods, allocation factors and the corporation's pricing policy for the services provided.

(2) In cases involving centers that perform specialized functions and synergize to create added value of the group, taxpayers must determine the total value created from these functions, determine the level Allocate profits in accordance with the value of the contributions of affiliated parties after deducting (-) the corresponding service fees.

(3) Non-deductible service costs include: Costs arising from services provided solely for the benefit or creation of value for other affiliated parties; Services serving the interests of shareholders of affiliated parties; Duplicate charging services provided by multiple affiliated parties for the same type of service, with no identifiable added value for taxpayers.

C/ Tax calculation costs for total loan interest expenses are deductible when determining income subject to corporate income tax

Pursuant to Clause 3, Article 16 of Decree 132/2020/ND-CP, total loan interest expenses are deductible when determining income subject to corporate income tax for enterprises with associated transactions:

(1) Deductible when determining taxable income of corporate income tax does not exceed 30% of total net profit from business activities in the period plus loan interest expenses after deducting deposit interest and loan interest incurred. during the period plus depreciation expenses incurred during the period.

(2) The portion of loan interest expenses that are not deductible according to the provisions in the first bullet point of this section shall be carried over to the next tax period when determining the total deductible loan interest expenses in case the total loan interest expenses arise. deductible for the next tax period is lower than the level specified in the first bullet point of this section. 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.

(3) Does not apply to loans from taxpayers who are credit institutions under the Law on Credit Institutions 2010; organize insurance business according to the Law on Insurance Business 2022; Official development assistance (ODA) loans and preferential loans from the Government are implemented in the form of the Government borrowing foreign loans to on-lend to businesses; loans to implement national target programs; Loans to invest in programs and projects to implement the State's social welfare policies.

(4) Taxpayers declare the interest expense ratio in the tax period according to Appendix I issued with Decree 132/2020/ND-CP.

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