What is the Decree 20 of 2025 on amendments to Decree 132 on related-party transactions in Vietnam?
What is the Decree 20 of 2025 on amendments to Decree 132 on related-party transactions in Vietnam?
On February 10, 2025, the Government of Vietnam issued Decree 20/2025/ND-CP to amend and supplement several articles of Decree 132/2020/ND-CP by the Government of Vietnam, stipulating tax administration for enterprises with related-party transactions.
To be specific, Decree 20 of 2025 will be effective as of March 27, 2025, and will be applied for the 2024 CIT calculation period.
See the full text of Decree 20/2025/ND-CP on amendments to Decree 132/2020/ND-CP on related-party transactions...Download
Vietnam: What are amendments in Decree 20 of 2025 compared to Decree 132 of 2020?
Decree 20/2025/ND-CP...Download has amended and supplemented some regulations in Decree 132/2020/ND-CP regarding tax administration for enterprises with related-party transactions. To be specific:
(1) Articles Amended and Supplemented
- on amendments to, supplementing points d, point k, and adding point m in clause 2 of Article 5 of Decree 132/2020/ND-CP regarding parties with related relationships.
- on amendments to, supplementing clause 2 of Article 21 of Decree 132/2020/ND-CP on the responsibility of the State Bank in controlling and providing information related to related-party transactions.
- Replacing Appendix 1 on Information about Related Parties and related-party transactions with a new Appendix issued along with Decree 20/2025/ND-CP...Download
(2) Transitional Provisions on Interest Expense from the Tax Calculation Period 2020 - 2023
Enterprises with related parties and related-party transactions according to the provisions in Decree 132/2020/ND-CP and Decree 20/2025/ND-CP...Download are treated for non-deductible interest expenses as follows:
- In case there are no related parties:
The portion of non-deductible interest expenses from previous tax calculation periods (up to the end of 2023) will be evenly allocated into the subsequent tax calculation periods as prescribed in point b clause 3 of Article 16 of Decree 132/2020/ND-CP.
- In case of having related parties and related-party transactions:
Non-deductible interest expenses from previous periods will be handled as prescribed in point b clause 3 of Article 16 of Decree 132/2020/ND-CP.
What is the Decree 20 of 2025 on amendments to Decree 132 on related-party transactions in Vietnam? (Image from Internet)
What are the principles for applying related-party transactions in Vietnam?
According to Article 3 of Decree 132/2020/ND-CP, the principles when applying related-party transactions are stipulated as follows:
- Taxpayers with related-party transactions must eliminate elements that reduce tax obligations due to controlling influence of related relationships to declare and determine tax obligations for related-party transactions equivalent to independent transactions under the same conditions.
- Tax authorities manage, inspect, and audit the pricing of related-party transactions according to the principle of independent transaction and the substance of activities and transactions determining the corresponding tax obligations with the value generated from the substance of the transaction, production, and business activities of the taxpayer, not recognizing related-party transactions that do not adhere to the independent transaction principle that reduce the taxpayer's obligations to the state budget and adjusting the transaction prices to accurately determine tax obligations as prescribed by this Decree.
What are the rights and responsibilities of tax authorities in managing transfer prices in Vietnam?
According to Article 20 of Decree 132/2020/ND-CP, the responsibilities and powers of tax authorities in managing transfer prices include:
- Applying risk management in tax administration for transfer pricing pricing according to tax law.
+ Managing, using taxpayer information with related-party transactions to serve risk management tasks;
+ Applying risk management in planning inspections and audits for enterprises with related parties and related-party transactions;
+ Managing, utilizing the country-by-country report of taxpayers for risk management tasks, exchanging information as per the regulations and commitments of Vietnam in international tax agreements, not using it to arbitrarily assign tax.
- Tax authorities based on the principles of analysis, comparison, and methods for determining transfer pricing transaction prices stipulated in this Decree, and the tax obligation declaration information of enterprises with related-party transactions to apply tax determination in the following cases:
+ Taxpayers violating tax laws but implementing complete accounting policies, invoices, receipts: The revenue, expenses, or taxable income determination to establish tax obligations follows analysis principles, comparable transaction methods, and the price determination database used in managing transfer pricing pricing stipulated in this Decree;
+ Other cases as defined in clause 2, Article 50 of the Law on Tax Administration 2019 dated June 13, 2019;
+ Tax authorities provide conditions for taxpayers to justify and clarify figures, data of independent comparable subjects used in the Transfer Pricing Pricing Documentation.
- Tax authorities have the right to determine price levels; profit margin levels; profit allocation ratios; taxable income or the amount of corporate income tax payable for taxpayers not complying with regulations on declaration, determining related-party transactions; not providing or providing insufficient information, data to declare and determine transfer pricing pricing in the following cases:
+ Taxpayers not declaring, incompletely declaring information, or failing to submit Appendix I issued with Decree 132/2020/ND-CP;
+ Taxpayers providing incomplete information in the Transfer Pricing Pricing Documentation outlined in Appendices II and III issued with this Decree or failing to present the Transfer Pricing Pricing Documentation and data, documents used as the basis for analysis, comparison, defining prices in the Transfer Pricing Pricing Documentation as requested by the tax authority within the stipulated time in Decree 132/2020/ND-CP. Information in the Transfer Pricing Pricing Documentation is considered significant if it impacts the outcome of analyzing the choice of similar independent comparable objects; the transfer pricing determination method, or the result of adjusting the price level, profit margin, profit allocation ratio of the taxpayer;
+ Taxpayers using untruthful, incorrect information on independent transactions for analyzing, comparing, declaring transfer pricing pricing, or relying on illegal, invalid, or unspecified origin documents, data to determine the price level, profit margin or profit allocation ratio applied to the transfer pricing transaction;
+ Taxpayers violating regulations on determining transfer pricing pricing at Article 19 of this Decree;
+ The database used for assigning tax follows the regulations in the Law on Tax Administration Law on Tax Administration 2019 dated June 13, 2019.
- Tax authorities are responsible for securing the information provided by taxpayers related to determining transfer pricing pricing per the Decree. Providing information to agencies and organizations follows provisions at clause 5, Article 3 of Decree 132/2020/ND-CP.
- In cases where inspections identify issues with the regulatory mechanism regarding industry-related policies, tax authorities shall seek opinions from related disciplines, specifically:
+ Specialized management agencies, industry-specific organizations, associational bodies;
+ Tax authorities shall provide relevant documentation, information concerning transfer pricing determination to sector-specific entities being consulted. Consulting entities are responsible for maintaining confidentiality according to legal provisions.
- Tax authorities will exchange information with taxpayers and partner tax authorities before, during, and after the transfer pricing pricing inspection.
+ If tax administration for transfer pricing pricing requires prior information exchange with taxpayers regarding Appendix I attached to Decree 132/2020/ND-CP and the taxpayer’s Transfer Pricing Pricing Documentation, tax authorities will propose consultations to discuss these beforehand per Decree 132/2020/ND-CP;
+ For engagements with partner tax authorities relating to country-by-country profit reports and associated details, adhere to bilateral agreements and information exchange terms in relevant tax treaties. Tax authorities may inform taxpayers in writing of any necessary suspension on audits to engage in information exchanges as required by tax legislation.
- Tax authorities will implement automatic information exchange frameworks per Vietnam's international commitments and tax treaties. Annually, tax authorities will disclose a list of eligible foreign tax authorities for automatic information exchange concerning taxpayer country-by-country reports on the tax department's electronic portal.
- Tax authorities undertake adjustments to transfer pricing determination following agreed bilateral terms in relevant tax treaties.
- Should tax authorities enter into Advance Pricing Agreements (APA) with taxpayers concerning transfer pricing determination methods, responsibilities entail:
+ Oversight and enforcement of related-party transactions not covered by the APA using risk management principles;
+ Managing and verifying compliance with the signed APA terms by taxpayers as per regulations.
