Proposal to soon amend Decree 132 on tax management for related-party transactions

In Resolution 105/NQ-CP dated July 15, 2023 on tasks and solutions to remove difficulties for production and business, continue to promote administrative procedure reform, tighten discipline and order, the Government assigned the Ministry of Finance to preside over and coordinate with ministries and agencies to research and propose amendments to Decree No. 132 to remove difficulties for manufacturing enterprises related to tax management regulations for related transactions, and report to the Prime Minister in the fourth quarter of 2023.

According to businesses, amending Decree 132 is an extremely urgent task, of vital importance to thousands of businesses. However, there is still no signal regarding the amendment of this decree.

real estate.jpg — Many businesses are thirsty for capital.

Even according to the schedule set out in Official Dispatch No. 7725 dated October 18, 2023 of the General Department of Taxation, it will not be until August 2024 that the Ministry will submit to the Government a draft amendment to the decree.

A business leader shared: Thousands of Vietnamese businesses are on the brink of bankruptcy due to lack of capital. However, according to Decree 132, loans are not included in the eligible expenses, so many businesses do not dare to borrow capital to expand production and business. This is also the reason why the banking system has excess money but cannot lend.

This makes businesses even more difficult, creating barriers in accessing capital, expanding production and business and improving business competitiveness.

"Decree 132, after a period of implementation, has created many limitations, causing difficulties for businesses. The shortcomings need to be quickly amended to suit current practices, thereby promptly removing difficulties and obstacles, creating favorable momentum for production and business, ensuring transparency and consistency in law enforcement," the leader of this business expressed.

Decree No. 20/2017 on Tax Administration for Companies with Related Transactions was issued to replace the current regulations on transfer pricing (Circular 66/2010/TT-BTC), thereby establishing more complete regulations on the obligation to declare and determine transfer pricing in Vietnam...

However, the regulations still have many shortcomings, especially the regulation limiting deductible interest expenses when calculating corporate income tax at 20%, causing difficulties for businesses.

Therefore, Decree No. 68 dated June 24, 2020 amended Clause 3, Article 8 of Decree No. 20 to increase the control ratio of deductible interest expenses (from 20% to 30%).

Decree 132 continues to inherit the above regulations. However, businesses propose to increase the control level of interest expenses to suit the new situation.

Low capital, high taxes: Controlling interest expenses makes businesses more difficult

Two years since Decree 20 took effect, the business community has been tirelessly petitioning on the unreasonable point of the regulation controlling deductible interest expenses when calculating taxes. But so far, all has been silence.