Decree 20: What are amendments to Decree 132 on related-party transactions in Vietnam?

Decree 20: What are amendments to Decree 132 on related-party transactions in Vietnam?

Decree 20/2025/ND-CP amending Decree 132/2020/ND-CP on tax administration for enterprises with related-party transactions was issued on February 10, 2025.

Decree 20/2025/ND-CP, effective from March 27, 2025, amends and supplements certain articles of Decree 132/2020/ND-CP concerning tax administration for enterprises with related-party transactions as follows:

- Amend and supplement point d, point k, and add point m of Clause 2, Article 5 of Decree 132/2020/ND-CP regarding related parties.

- Amend and supplement Clause 2, Article 21 of Decree 132/2020/ND-CP regarding the responsibilities of the State Bank.

- Replace Appendix I - Information on related parties and related-party transactions accompanying Decree 132/2020/ND-CP on tax administration for enterprises with related-party transactions with Appendix I issued with Decree 20/2025/ND-CP.

See detailed Decree 20/2025/ND-CP amending Decree 132/2020/ND-CP on Related-Party Transactions: Download

Decree 20: What are amendments to Decree 132 on related-party transactions in Vietnam? (Image from the Internet)

What are cases of related-party transactions in Vietnam?

Based on the provisions of Clause 1, Article 5 of Decree 132/2020/ND-CP, the following is stipulated:

Related Parties

1. Related parties (hereinafter referred to as "related parties") are parties that have a relationship in one of the following cases:

a) One party participates directly or indirectly in the management, control, capital contribution, or investment in the other party;

b) The parties are directly or indirectly under the management, control, capital contribution, or investment of another party.

...

Thus, according to the aforementioned provisions, a related-party transaction is established when:

- One party participates directly or indirectly in the management, control, capital contribution, or investment in the other party;

- The parties are directly or indirectly under the management, control, capital contribution, or investment of another party.

What are the regulations regarding parties involved in related-party transactions in Vietnam?

Based on Clause 2, Article 5 of Decree 132/2020/ND-CP, the regulations specifically concerning parties involved in related-party transactions are as follows:

- An enterprise directly or indirectly holds at least 25% of the charter capital of another enterprise;

- Both enterprises have at least 25% of their charter capital held directly or indirectly by a third party;

- An enterprise is the largest shareholder in terms of charter capital and directly or indirectly holds at least 10% of the total shares of another enterprise;

- An enterprise guarantees or lends to another enterprise under any form (including loans from a third party that are secured from the financing of the related party and transactions of a similar financial nature) with the loan at least 25% of the borrowing enterprise's charter capital and accounting for over 50% of the total medium and long-term debts of the borrowing enterprise;

- An enterprise appoints executive management members or controls another enterprise provided that the number of members appointed by the first enterprise constitutes over 50% of the total executive management members of the second enterprise, or a member appointed by the first enterprise has the authority to decide on financial or business policies of the second enterprise;

- Both enterprises have more than 50% of the executive management members or have a common executive management member who has the authority to decide on financial or business policies appointed by a third party;

- Both enterprises are managed or controlled regarding personnel, finance, and business operations by individuals with one of the following relationships: spouse; biological parents, adoptive parents, stepparents, parents-in-law; biological children, adopted children, stepchildren, sons-in-law, daughters-in-law; siblings from biological parents, half-siblings, brothers-in-law, sisters-in-law; grandparents; grandchildren; biological uncles, aunts, and nieces, nephews;

- Two businesses have a relationship of a head office and permanent establishment or both are permanent establishments of an organization, foreign individual;

- Businesses are under the control of an individual through their capital contribution to the enterprise or directly participating in the enterprise management;

- Other cases in which a business is under the factual management, control, or decision concerning the business activities of another enterprise;

- An enterprise engages in transactions of transferring, receiving rights in capital contributions of at least 25% of the charter capital of another enterprise in the tax period; lending, borrowing at least 10% of the charter capital at the time of the transaction in the tax period with individuals managing, controlling the enterprise, or with individuals having relationships as specified in point g of Clause 2, Article 5 of Decree 132/2020/ND-CP.