AFFILIATE TRANSACTIONS AND THINGS YOU NEED TO KNOW

The concept of LINKED TRANSACTIONS is surely still very vague to many accountants.

Is a unit specializing in training and providing book cleaning services. Through contact and monitoring the results of recent tax settlements of service businesses, students, customers... most of the errors that tax authorities catch in businesses lead to the risk of arrears 1 The huge number of taxes that many accountants do not pay attention to or do not have experience in foreseeing the problem to prevent is related to Affiliate Transactions.

Most accountants at businesses are also very vague and do not clearly understand the concept of Related Transactions and risks because this is also a concept that is rarely shared in the accounting community, so many accountants have not seen it. the level of risk of the problem.

Specifically, what are the risks related to affiliate transactions:

– Eliminate all loan interest exceeding 30% according to the provisions of Decree 132/2020 and then collect corporate income tax if any arises (Pay tax 20% profit). At the same time, collect additional interest to pay taxes.

So accountants will have to understand the concept of what kind of transactions are called related transactions?

According to Clause 3, Article 4, Decree 20/2017/ND-CP, Joint Transactions (GDLK) are defined as transactions arising between parties that have an associated relationship in the process of production, business, and inclusion. including:

Buy - Sell - Exchange - Rent - Lease - Borrow - Lend, Transfer, Transfer machinery, equipment, goods, Provide services, Borrow - Lend, Financial services, Financial guarantee and other financial instruments; Buy, Sell, Exchange, Rent, Lease, Borrow, Lend, Transfer, Transfer tangible assets, intangible assets and agreements on common use of resources such as synergies, cooperation in exploiting and using human resources force; share costs between affiliated parties.”

a) One party participates directly or indirectly in operating, controlling, contributing capital or investing in the other party.

b) The parties are directly or indirectly under the management, control, capital contribution or investment of another party.

a) One enterprise directly or indirectly holds at least 25% of capital contributed by the owner of the other enterprise;

b) Both enterprises have at least 25% of owner's contributed capital held directly or indirectly by a third party;

c) One enterprise is the largest shareholder in terms of owner's capital contribution and directly or indirectly holds at least 10% of the total shares of the other enterprise;

d) An enterprise guarantees or lends capital to another enterprise in any form (including loans from third parties guaranteed from the financial resources of affiliated parties and financial transactions involving similar nature) with the condition that the loan capital is at least equal to 25% of capital contributed by 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;

d) An enterprise appoints members of the executive management board or takes control of another enterprise, provided that the number of members appointed by the first enterprise accounts for more than 50% of the total number of executive management board members. operate or take control of a second enterprise; or a member appointed by the first enterprise has the right to decide on the financial policies or business operations of the second enterprise;

e) Two enterprises have more than 50% members of the board of directors or have a member of the board of directors with the right to decide on financial policies or business operations appointed by a third party;

g) Two enterprises are operated or controlled in terms of personnel, finance and business operations by individuals belonging to one of the husband and wife relationships; biological parents, adoptive parents, stepfather, stepmother, parents-in-law, parents-in-law; biological children, adopted children, stepchildren of spouses, daughters-in-law, sons-in-law; brother, sister, half-brother, half-brother, half-brother, half-brother, half-brother, half-brother, brother-in-law, sister-in-law, sister-in-law of a person of the same parents or half-father, same mother, different father; paternal and maternal grandparents; grandchildren and great-grandchildren; aunts, uncles, uncles, nieces and nephews;

h) Two business establishments that have a head office and permanent establishment relationship or are both permanent establishments of foreign organizations and individuals;

i) Enterprises are controlled by an individual through this individual's capital contribution to that enterprise or direct participation in managing the enterprise.

k) Other cases in which the enterprise is subject to actual management, control, and decisions regarding the production and business activities of the other enterprise;

l) The enterprise has incurred transactions of transfer or receipt of capital contribution transfer of at least 25% of capital contributed by the owner of the enterprise during the tax period; Borrow or lend at least 10% of the owner's contributed capital at the time of the transaction in the tax period with an individual who operates or controls the enterprise or with an individual in one of the relationships specified in point 1. g this clause.

– Director lends money to the company for business (Accounting often applies to handling negative funds)

– Two enterprises were established to buy, sell and exchange goods with each other under the name of a Director or in a husband and wife relationship; biological parents, adoptive parents, stepfather, stepmother, parents-in-law, parents-in-law; biological children, adopted children, stepchildren of spouses, daughters-in-law, sons-in-law; brother, sister, half-brother, half-brother, half-brother, half-brother, half-brother, half-brother, brother-in-law, sister-in-law, sister-in-law of a person of the same parents or half-father, same mother, different father; paternal and maternal grandparents; grandchildren and great-grandchildren; aunts, uncles, uncles, nieces and nephews;

– A bank loan is also a related transaction if the loan is at least equal to 25% of capital contributed by the owner of the borrowing business and accounts for more than 50% of the total value of medium and long-term debts of the borrowing business. (Many businesses are facing this situation, for example: Charter capital: 1 billion but borrow 2 billion from the bank - exceeding 200%, then surely when tax administration will be controlled, 30% will be the loan interest included in expenses. 70% The remaining interest expenses will be excluded from expenses and collect corporate income tax if a tax liability arises)

For more information and inquiries Link transaction reporting service You can learn through the article: https://aacs.com.vn/dich-vu/dich-vu-lap-bao-cao-giao-dich-lien-ket/

Tel: 0908 381 550 (Mr. Manh) – 0908 688 550 (Ms. Phuong)

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