Vietnam: What is the Decree 20 2025 on amendments to Decree 132 2020?

Vietnam: What is the Decree 20 2025 on amendments to Decree 132 2020?

On February 10, 2025, the Government of Vietnam issued Decree 20/2025/ND-CP on amendments to and supplementing several articles of Decree 132/2020/ND-CP by the Government of Vietnam regarding tax management for enterprises engaged in related transactions.

Specifically, Decree 20 of 2025 will take effect from March 27, 2025, and will be applicable from the corporate income tax calculation period of 2024.

View the full text of Decree 20/2025/ND-CP on amendments to Decree 132/2020/ND-CP on Related Transactions below:

Download the PDF file of Decree 20 2025 on amendments to Decree 132 2020...HERE

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Vietnam: What is the Decree 20 2025 on amendments to Decree 132 2020? (Image from the Internet)

Vietnam: What content does Decree 20 of 2025 amend in Decree 132 2020?

Decree 20/2025/ND-CP...Download has amended and supplemented several provisions in Decree 132/2020/ND-CP related to tax management for enterprises with related transactions. Specifically:

(1) Amended and supplemented articles

- Amend and supplement point d, point k and add point m in 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 responsibility of the State Bank in controlling and providing information related to related-party transactions.

- Replace Appendix 1 on related-party information and related-party transactions with a new Appendix issued with Decree 20/2025/ND-CP...Download.

(2) Transitional provisions regarding interest expenses from the 2020 - 2023 tax calculation periods

In cases where, in the corporate income tax calculation periods for 2020, 2021, 2022, and 2023, companies borrowing funds only have related-party relationships with economic entities operating in accordance with the Law on Credit Institutions as stipulated in point d, clause 2, Article 5 of Decree 132/2020/ND-CP and companies borrowing with lenders or guarantors fall into the cases regulated at points d.1 and d.2, clause 2, Article 5 of Decree 132/2020/ND-CP as revised and supplemented in Article 1 of Decree 20/2025/ND-CP, and have related-party transactions within the regulatory scope in clause 2, Article 1 of Decree 132/2020/ND-CP and have interest expenses that are not deductible as per the regulation at point a, clause 3, Article 16 of Decree 132/2020/ND-CP then from the 2024 tax calculation period it will be implemented as follows:

- In cases where a company does not have related-party relationships and does not incur related-party transactions as stipulated in Decree 132/2020/ND-CP and Decree 20/2025/ND-CP, the interest expenses that were not deductible and not carried over to subsequent tax calculation periods up to the end of the 2023 tax calculation period will be equally distributed to subsequent tax calculation periods for the remaining period as per the provisions on the time allowed to carry forward interest expenses at point b, clause 3, Article 16 of Decree 132/2020/ND-CP.

- In cases where a company has related-party relationships and related-party transactions as specified in Decree 132/2020/ND-CP and Decree 20/2025/ND-CP, the non-deductible interest expenses that were not carried over to subsequent tax calculation periods will be implemented according to the provisions at point b, clause 3, Article 16 of Decree 132/2020/ND-CP.

What are the provisions for determining related parties according to Decree 20?

Accordingly, based on Article 5 of Decree 132/2020/ND-CP as amended and supplemented by Article 1 of Decree 20/2025/ND-CP...Download for determining related parties as follows:

(1) Amend and supplement point d, clause 2, Article 5 of Decree 132/2020/ND-CP as follows:

A company guarantees or lends funds to another company in any form (including loans from third parties guaranteed by the financial resources of the related entity and financial transactions of a similar nature) provided that the total outstanding debt of the borrowing company with the lending or guaranteeing company is at least 25% of the borrowing company's owner's equity and exceeds 50% of the total medium and long-term outstanding debt of the borrowing company.

The provisions at point d of this clause do not apply to the following cases:

- The guarantor or lender is economic organizations operating under the provisions of the Law on Credit Institutions and does not directly or indirectly participate in managing, controlling, contributing capital, or investing in the borrowing or guaranteed company according to the provisions at points a, c, d, e, g, h, k, 1, and m, clause 2, Article 5 of Decree 132/2020/ND-CP.

- The guarantor or lender is economic organizations operating under the provisions of the Law on Credit Institutions and the borrowing or guaranteed company is not directly or indirectly under the same management, control, capital contribution, or investment of another entity according to the provisions at points b, e, and i, clause 2, Article 5 of Decree 132/2020/ND-CP.

(2) Amend and supplement point k, clause 2, Article 5 of Decree 132/2020/ND-CP as follows:

Other cases in which a company (including independently accounted branches that declare and pay corporate income tax) is subject to the actual management, control, and decision-making over the business activities of another company."

(3) Add point m in clause 2, Article 5 of Decree 132/2020/ND-CP as follows:

Credit institutions with their subsidiaries or with controlled companies or with affiliated companies of the credit institution in accordance with the Law on Credit Institutions and the amended, supplemented, or replaced documents (if any);"