NOTICE FOR TAX RISK WHEN THE SELLING PRICE IS LOWER THAN THE COST OF GOODS SOLD

It is important to be aware that there is a significant risk of being challenged by the tax authority for the issue of the cost of goods sold is higher than the selling price according to current regulations.

Specifically, Decree 126/2020/ND-CP stipulates that:

Tax liability will be imposed by the tax authority if the taxpayer:
….
8. Buying, selling, exchanging, or accounting for the value of goods and services in a way that is not consistent with the normal transaction value on the market.

In practice, tax authorities typically use different sources as reference points to determine the actual market price for tax calculation purposes. These sources may include the prices of goods and services announced by state management agencies and the purchase and selling prices of businesses in the same industry that sell similar goods or services on a large scale and to a significant number of customers within the local area. These references serve as a basis for determining the appropriate selling price, purchase price, and the corresponding tax payable.

Hope it is informative for you, and do not hesitate to reach out if you have any further questions or require any additional assistance.

FAV Team