Bài giảng chuyên Đề transfer pricing (tp) phục vụ module f6 acca

Transfer Pricing & Related Party Transactions

• Overview: Most complex topic in F6 due to limited

guidance and practical challenges

• Focus: Basic concepts for the exam, per Decree

132/2020/ND-CP

• 2025 Updates:

– Interest expense cap: 30% of EBITDA (Decree 132)

– Personal identification numbers (July 1, 2025)

– Automated tax finalization (2026)

What is Transfer Pricing?

• Definition: Manipulating transfer prices in related party

transactions to shift profits from high-tax to low-tax

jurisdictions, minimizing tax and maximizing after-tax profit

• Related Party Transactions: Transactions between

entities with a capital or control relationship (e.g.,

parent-subsidiary)

• Transfer Price: Price set for related party transactions,

regulated by Decree 132/2020/ND-CP

Scenario Example

• Setup:

– Company A (US) owns 100% of B (Vietnam) and C

(China)

– C produces calligraphy tools; B imports and distributes in Vietnam

• Transactions:

– B sells to independent customers: Independent

transactions

– B buys from C: Related party transactions (A, B, C

related via ownership)

• Issue: Transfer price between B and C affects profit

allocation and tax liability

Why Regulate Transfer Pricing?

• Impact:

– High transfer price: Increases Cs profit (China) and

reduces Bs (Vietnam)

– Low transfer price: Reduces Cs profit and increases Bs

• Tax Motivation: Group maximizes after-tax profit by

allocating more profit to low-tax jurisdictions (e.g., Vietnam

vs China)

• Goal of Decree 132: Ensure profits are taxed where value

is created, preventing profit shifting

Common Transfer Pricing Methods

• Inflating Capital Contribution: Overvalue tangible (e.g.,

machinery) or intangible (e.g., technology) assets

• Overstating Intangible Assets: Inflate prices of software,

patents, or trademarks

• Machinery Sales: Sell obsolete equipment to subsidiaries

to transfer funds

• High Management Costs:

– High manager salaries, parent company fees, or costly

overseas training

• Note: These methods require verification to confirm

transfer pricing

Key Knowledge for F6 Exam

• ACCA Syllabus Requirements:

– Identify related parties (Article 5, Decree 132)

– Explain and apply transfer pricing principles

– Understand methods for determining market prices

• Regulation: Decree 132/2020/ND-CP, supplemented by

Circular 41/2021/TT-BTC

Identifying Related Parties (1)

• Categories (Article 5, Decree 132):

– One party controls/invests in another (e.g., A controls

B/C)

– Parties share common control/investment (e.g., B and C via A)

• Type 1 Examples:

– A holds 25% of Bs equity

– A is Bs largest shareholder ( 10%)

– A controls Bs business decisions

– A guarantees/lends 25% of Bs equity (> 50% of

medium/long-term debt)

Identifying Related Parties (2)

• Type 1 (Continued):

– A appoints > 50% of Bs management or controls policies – A transfers/receives 25% of Bs capital or lends 10%

with related individuals

– A and B have a head officepermanent establishment

relationship

• Type 2 Examples:

– B and C are As permanent establishments

– B and C share > 50% management or one controlling

member appointed by A

– B and C are controlled by related individuals or one

individual ( 25% ownership)

Transfer Pricing Principles (1)

• Substance Over Form:

– Determine the transactions true nature (e.g., are

management fees for actual services or profit transfer?) – Compare legal documents (contracts) with actual

performance

– Resolve discrepancies by identifying the true nature

(document vs reality)

• 2025 Note: Circular 41/2021 emphasizes substance for

digital transactions

Transfer Pricing Principles (2)

• Comparison with Independent Transactions:

– Independent transactions (e.g., Bs sales to customers)

reflect market prices

– Compare related party prices to equivalent independent

transaction prices

– Investigate differences for reasonableness

• Challenges: Finding comparable independent transactions

requires identical products and conditions (e.g., product

characteristics, contract terms)

• Adjustments: Eliminate material differences before

comparison

Methods for Determining Transfer Prices

• Three Methods (Decree 132):

– Comparable Uncontrolled Price (CUP) Method

– Comparable Profits Method

– Profit Split Method

• Selection: Based on transaction characteristics and data

availability

• Documentation: Local file, master file, and

country-by-country report required (Circular 41/2021)

Comparable Uncontrolled Price (CUP) Method

• Approach: Compare related party transaction price to

independent transaction price

• Requirement: Highly comparable independent transactions

(no material differences in product or contract terms)

• Example: Subsidiary borrows from parent; compare to

independent loan with similar size, terms, and conditions

• Applicability:

– Common goods/services, royalty payments, loan interest – Taxpayers with both related and independent

transactions

Comparable Profits Method

• Applicability: When CUP or profit split methods are not

feasible

• Approaches:

– Resale Price: Related party purchase price = Independent sale price (Sale price Ư Independent gross margin)

– Cost Plus: Related party sale price = Independent

purchase price + (Cost Ư Independent gross margin)

– Net Profit Margin: Adjust taxpayers net margin to match independent entities (before interest/CIT)

• Example: A buys from B for VND 100, sells to C for VND

120 (independent margin 10%): Related price = 120 (120

Ư 10%) = 108

Profit Split Method

• Approach: Allocate total related party transaction profit

(actual + potential) among parties based on revenue, costs,

or assets

• Example: Group profit = VND 100 billion, total revenue =

VND 1,000 billion Taxpayers revenue = VND 10 billion

Profit = 100 Ư (10/1,000) = VND 1 billion

• Applicability: Complex, unique, or closed-loop group

transactions (e.g., proprietary technology, exclusive value

chains)

• Challenge: Requires extensive group-wide data.

Summary and 2025 Updates

• Summary:

– Transfer pricing shifts profits via related party transaction prices

– Decree 132 regulates related parties, principles (substance over form, comparison), and methods (CUP, profits,

profit split)

• 2025 Updates:

– Interest cap: 30% EBITDA (Decree 132)

– Documentation: Stricter requirements (Circular 41/2021) – Personal identification numbers (July 1, 2025)

– Automated tax finalization (2026)