LEGAL
DOCUMENT

Related-party transactions refer to the buying, selling, exchange, leasing, lending, borrowing, transfer, or assignment of goods and services; loans, lending, financial services, financial guarantees, and other financial instruments; the buying, selling, exchanging, leasing, lending, borrowing, transfer, or assignment of tangible and intangible assets; and agreements involving joint resource utilization such as assets, capital, labor, or cost-sharing between related parties, except for transactions involving goods and services subject to state-regulated prices as per the pricing law.

a) One party directly or indirectly participates

in managing, controlling, contributing capital, or investing in the other party;

b) Both parties are directly or indirectly

under the management, control, capital contribution, or investment of another party.

a) One enterprise holds directly or indirectly at least 25% of the ownership capital

of the other enterprise;

b) Both enterprises have at least 25% of their ownership capital

held directly or indirectly by a third party;

c) One enterprise is the largest shareholder

of the other enterprise, holding directly or indirectly at least 10% of the total shares of the other enterprise;

d) One enterprise guarantees or lends to another enterprise under any form

(including loans from third parties secured by the financial resources of the related party, and similar financial transactions), provided that the loan amount is at least 25% of the ownership capital of the borrowing enterprise and constitutes over 50% of the total medium and long-term debt of the borrowing enterprise;

h) Two business establishments have a relationship of a head office and a permanent establishment,
or
both are permanent establishments of a foreign organization or individual;

dd) One enterprise appoints members of the board of directors or has control over the board of another enterprise,

with the appointed members accounting for over 50% of the total members of the board of directors or control of the second enterprise; or one member appointed by the first enterprise has the authority to decide financial policies or business activities of the second enterprise;

e) Two enterprises share over 50% of the board members or have one member of the board

with the authority to decide financial policies or business activities, who is appointed by a third party;

i) Enterprises are controlled by an individual through this individual’s capital contribution

or

direct involvement in management;

k) Other cases

where an enterprise exerts effective control over the operations of another enterprise;

g) Two enterprises are controlled or managed in terms of personnel, finance, and business operations by individuals related by family ties such as

spouses, parents, biological or adopted children, step-parents, parents-in-law, siblings, grandparents, grandchildren, uncles, aunts, nephews, nieces, and other close relatives;

d) Enterprises engaging in transactions:

involving the transfer or acquisition of at least 25% of the ownership capital from the enterprise’s owner during the tax period; loans or borrowings of at least 10% of the owner’s capital at the time the transaction occurs in the tax period with individuals who manage or control the enterprise, or with individuals who are part of any relationship as specified in point g of this section.

Tax authorities shall manage, inspect, and audit the related party transaction prices of taxpayers according to the arm’s length principle and the nature of the activities or transactions that determine the corresponding tax obligations based on the value created from the nature of the transaction, business, and production activities of the taxpayer, while not recognizing related party transactions not conducted in accordance with the arm’s length principle that reduce the company’s tax obligations to the state budget and adjusting those related party transaction prices to determine the correct tax obligations as prescribed by this Decree.

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