Year-end Tax Compliance | KPMG | VN

2017 Year-end Tax Compliance

2017 Year-end Tax Compliance

How to manage risk of Corporate Income Tax (CIT) and Transfer Pricing (TP) non-compliance

How to manage risk of Corporate Income Tax (CIT) and Transfer Pricing (TP) non-compliance

Are we prepared?

More than half of the non-compliance identified through tax audits in the recent years are associated with Corporate Income Tax (CIT) and Transfer Pricing (TP) documentation. Under the pressure of revenue collection (e.g. State budget deficit), or where specific risk areas are identified, the extent and intensity of tax audits are often increased at both provincial tax departments level and the General Department of Taxation level.

What’s new in 2017?

Two major changes in 2017 which impact the way companies perform filing of annual tax returns:

(1) The new income tax return disclosures require additional information disclosures of related partytransactions.

(2) Decree 20, effective from 1 May 2017, fundamentally changes the disclosure forms and the complexity of the TP documentation, (Local File, Master File, and Country- by CountryReport), four TP disclosure forms, interestexpense cap, “substance over form” principle, and CIT deductibility for certain related partytransactions (e.g. royalty, technical assistance, consultancy services, trademark license, etc.)

Common CIT and TP compliance issues

  • Incorrect assessment of tax incentives due to changes in tax and investment regulations and in the business and investment structure.
  • Over claimed deductible expenses.
  • Cross border transactions without clear commercial or contractual structures or proper evidence of cost and service performance.
  • Inappropriate allocation of expenses among related parties or among different business functions of an enterprise.
  • Incorrect claim of tax losses carried forward.
  • Incorrect declaration of TP disclosure forms and TP documentation.
  • TP disclosure forms and/or TP documentation are not submitted and maintained by the statutory deadline.

Potential exposure

  • Administrative penalty at 20%
  • Late payment interest at 0.03%/day

How KPMG can help

KPMG’s experienced corporate tax and government liaison team can assist you in understanding, complying, and managing the new reporting requirements, which will impact your tax filing and documentation obligations. In addition, KPMG could also help identify opportunities to secure tax savings or tax incentives through proper CIT planning for 2018.


Dowdload brochure: 2017 Year-End CIT Compliance

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