New Points in Decree 20/2025/ND-CP on Tax Management with Related Party Transactions:

Decree 20/2025/ND-CP has amended, supplemented, and added some important regulations on related parties, specifically as follows:

Amended regulations on related parties in the case of borrowing:

• Old content: A business guarantees or lends capital to another business on the condition that the loan amount is at least equal to 25% of the owner’s contributed capital of the borrowing business and accounts for over 50% of the total value of the borrowing business’s medium and long-term debts.
• New content: The total outstanding balance of loan capital of the borrowing business with the lending or guaranteeing business is at least equal to 25% of the owner’s contributed capital of the borrowing business and accounts for over 50% of the total outstanding balance of all the borrowing business’s medium and long-term debts.
• Cases of non-application:
  
  • The guarantor or lender is an economic organization operating under the Law on Credit Institutions 2024 and does not participate in directly or indirectly managing, controlling, or contributing capital to the borrowing or guaranteed business.
  • The guarantor or lender is a credit institution, and the borrowing or guaranteed business is not directly or indirectly under the same management, control, or capital contribution of another party.

Amended regulations on related parties in the case of being subject to management and control:

• Old content: Other cases in which the business is subject to the actual management, control, and decision-making over the production and business activities of the other business.
• New content: Other cases in which the business (including independent accounting branches) is subject to the actual management, control, and decision-making over the production and business activities of the other business.

Supplemented cases of related parties:

The Decree supplements point m, clause 2, Article 5, stipulating that related parties include: Credit institutions with their subsidiaries, controlling companies, or affiliated companies as prescribed in the Law on Credit Institutions.

Supplemented responsibilities of the State Bank:

The State Bank is responsible for coordinating to provide information and data on foreign loans and repayments of each business with related party transactions at the request of the tax authorities. In addition, the State Bank must also coordinate to provide information on related persons of members of the Board of Directors, members of the Members’ Council, members of the Supervisory Board, General Directors (Directors), Deputy General Directors (Deputy Directors), and equivalent positions, related persons of shareholders owning 1% or more of the charter capital of credit institutions; Affiliated companies of credit institutions according to the management data information system of the State Bank when requested by tax authorities.

Impact of Decree 20/2025/ND-CP on businesses:

This new Decree will have a significant impact on businesses with related party transactions. Businesses need to promptly grasp these changes to ensure compliance with legal regulations and optimize tax management.

Recommendations:

• Businesses should proactively review their related party transactions to identify related parties under the new regulations.
• Businesses need to prepare complete and accurate dossiers and documents to prove their compliance in tax management with related party transactions.
• Businesses should thoroughly study the new regulations for proper and effective application.

Hopefully, this article has provided you with useful information about tax management with related party transactions under Decree 20/2025/ND-CP. If you have any questions, please contact us for more detailed advice.