1. AMENDMENTS AND REGULATIONS ON RELATED PARTY TRANSACTIONS

“Decree 20/2025/ND-CP amends and supplements points d, k and adds point m, Clause 2, Article 5 of Decree 132/2020/ND-CP regarding related parties.”

•According to point d, Clause 2, Article 5 of Decree 132/2020/ND-CP, related parties are defined as:

d) A company guarantees or loans capital to another company in any form (including loans from third parties guaranteed by the financial resources of related parties and financial transactions with similar characteristics), provided that the loan amount is at least 25% of the equity capital of the borrowing company’s owner and accounts for more than 50% of the total medium and long-term debts of the borrowing company.

• This content has been amended in Decree No. 20/2025/ND-CP as follows:

d) A company guarantees or loans capital to another company in any form (including loans from third parties guaranteed by the financial resources of related parties and financial transactions with similar characteristics), provided that the total loan balance of the borrowing company with the lending or guaranteeing company is at least 25% of the equity capital of the borrowing company’s owner and accounts for more than 50% of the total balance of all medium and long-term debts of the borrowing company.

• Moreover, Decree 20/2025/ND-CP has added cases where the above provision does not apply, including:

        – The guarantor or lender is a financial institution operating under the Law on Credit Institutions 2024 and does not directly or indirectly control, invest in, contribute capital, or operate the borrowing or guaranteed company according to points a, c, đ, e, g, k, l, and m of this clause.

        – The guarantor or lender is a financial institution operating under the Law on Credit Institutions and the borrowing or guaranteed company is not under direct or indirect control, contribution of capital, or investment by another entity under points b, e, and i of this clause.

• Additionally, point k, Clause 2, Article 5 of Decree No. 132/2020/ND-CP defines related parties as:

k) Other cases in which a company has actual control over the business activities of another company.

• The content has been clarified to include “the company with control” as covering independent accounting branches that carry out tax filings and pay corporate income tax.

2. ADDITION OF CASES
INVOLVING RELATED PARTIES

The Law on Credit Institutions (TCTD) defines the concepts of Subsidiary Company, Controlled Company, and Affiliate Company, which are intended to control credit institutions rather than for tax management purposes

However, to ensure consistency in regulations regarding Subsidiary, Controlled, and Affiliate Companies of credit institutions under the Law on Credit Institutions and the regulations on related parties in Decree 132/2020/ND-CP, as well as the spirit of Resolution No. 01/NQ-CP, the government has added point m to Clause 2, Article 5 of Decree 132/2020/ND-CP regarding related parties.

Accordingly, related parties can include credit institutions with subsidiaries, controlled companies, or affiliated companies of the credit institution. These entities are detailed in the Law on Credit Institutions and any relevant amendments or replacements (if any).

3. ADDITION OF RESPONSIBILITIES FOR THE STATE BANK OF VIETNAM

Clause 2, Article 21 of Decree No. 132/2020/ND-CP stipulates that the State Bank of Vietnam, within the scope of its tasks and authority, is responsible for coordinating to provide information and data on foreign loans and repayments for each specific company involved in related party transactions.

This is based on the list requested by the tax authorities, which includes data on loan amounts, interest rates, repayment terms, actual capital withdrawals, repayments (principal and interest), and other relevant information (if any).

In addition to the above regulations, Decree No. 20/2025/ND-CP also adds the responsibility of the State Bank of Vietnam to coordinate and provide information in accordance with legal regulations on related parties, including:

• Members of the Board of Directors, Board of Members, Supervisory Board, General Director (CEO), Deputy General Director (Deputy CEO), and equivalent positions as defined in the Charter of the credit institution.

• Related parties of shareholders owning 1% or more of the charter capital of the credit institution.

• Affiliate companies of the credit institution as per the data management system of the State Bank of Vietnam when requested by tax authorities.

This Decree will come into effect on March 27, 2025, and will be applied from the corporate income tax period of 2024.

“The above are three new points in Decree 20/2025/ND-CP regarding enterprises with related party transactions.”

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