The Ministry of Finance (MoF) has proposed new regulations on determining related-party transactions between enterprises and credit institutions to fight against transfer pricing, according to a report from the national English-language newspaper Việt Nam News.

The proposal is under a MoF’s draft decree amending and supplementing Decree No. 132/2020/ND-CP regulating tax management for enterprises with related transactions.

In the draft decree, which has been made public for comments, the MoF proposes a related party of a credit institution is an enterprise that directly or indirectly holds at least 20% of the charter capital of a credit institution. Both enterprises have at least 25% of the owner's capital contribution held directly or indirectly by a third party. The enterprise and the credit institution both have at least 20% of the charter capital held directly or indirectly by a third party.

Under the draft decree, the MoF also proposed the State Bank of Vietnam coordinates and provides information for tax authorities if being required to identify 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.

“The SBV should coordinate in providing information on related persons of credit institutions and associated enterprises of credit institutions when requested by the tax authority,” the MoF was quoted by the newspaper as proposing.

According to the MoF, the amended regulations in the draft decree is aimed to make the decree to be consistent with the provisions of the newly-issued Law on Credit Institutions.

The revised Law on Credit Institutions, which took effect from early July, is aimed at improving the legal frameworks in the banking sector, meeting the requirements of restructuring the banking system, ensuring safe and sound banking operations and enhancing the transparency in accordance with the international standards and practices.