Decree No. 20/2025/ND-CP dated February 10, 2025 on amendment to Decree No. 132/2020/ND-CP on tax administration of enterprises engaged in related-party transactions

DECREE

AMENDMENTS TO SOME ARTICLES OF THE DECREE NO. 132/2020/ND-CP DATED NOVEMBER 11, 2020 OF THE GOVERNMENT ON TAX ADMINISTRATION OF ENTERPRISES ENGAGED IN RELATED-PARTY TRANSACTIONS

Pursuant to the Law on Government Organization dated June 19, 2015; the Law on amendment to some articles of the Law on Government Organization and the Law on Local Government Organization dated November 22, 2019;

Pursuant to the Law on Tax Administration dated June 13, 2019;

Pursuant to the Law on Corporate Income Tax dated June 03, 2008; the Law on amendment to some articles of the Law on Corporate Income Tax dated June 19, 2013;

Pursuant to the Law on amendment to some articles of the Law on Taxes dated November 26, 2014;

At the request of the Minister of Finance;

The Government promulgates the Decree on amendment to some articles of the Decree No. 132/2020/ND-CP dated November 11, 2020 of the Government on tax administration of enterprises engaged in related-party transactions.

Article 1. Amendments to some articles of the Decree No. 132/2020/ND-CP dated November 05, 2020 of the Government on tax administration of enterprises engaged in related-party transactions

1. Amendment to points d, k, m Clause 2 Article 5:

a) Amendment to point d:

“d) An enterprise guarantees or offers another enterprise a loan under any form (even including third-party loans guaranteed by financing sources of related parties and financial transactions of same or similar nature) to the extent that the outstanding balance of the loan amount of the borrowing enterprise equals 25% of its equity and makes up for more than 50% of total medium and long term debts of the borrowing enterprise.

Point d of this Clause is not effective in the following cases:

d.1) The guaranteeing or lending enterprise is an economic organization that operates in accordance with regulations of the Law on credit institutions and does not directly or indirectly participate in the management, control of, does not contribute capital or invest in the borrowing enterprise as prescribed in points a, c, dd, e, g, h, k, l, and m of this Clause.

d.2) The guaranteeing or lending enterprise is an economic organization operating in accordance with regulations of the Law on credit institutions, and the borrowing enterprise is not directly or indirectly managed or controlled by, or invested in by another party as prescribed in points b, e, and i of this Clause.”

b) Amendment to point k:

“k) In other cases where an enterprise (including independent branches implementing declaration and payment for declaring and paying corporate income tax) has their business activities managed, controlled or decided de facto by the other enterprise;”

c) Addition of point m (after point l):

“m) Credit institutions with their subsidiaries, or with their controlling companies, or with their associate companies as prescribed in the Law on Credit Institutions and related amending, replacing documents (if any);”

2. Amendment to Clause 2 Article 21:

“2. The State Bank has the following responsibilities within their jurisdiction:

Cooperate in provision of information or data on foreign loans and debt repayments of particular enterprises engaged in related party transactions by reference to the lists compiled by tax authorities, including data on loan amounts, interest rates, periods of interest payment and principal repayment, actual fund withdrawal, debt (principal or interest) repayment and other related information (if any).

Cooperate in provision of information reported in accordance with the law on related persons of the members of the Board of Directors, members of the Board of Members, members of the Board of Controllers, General Director (Director), Vice General Director (Vice Director), and equivalent titles as prescribed in the Charter of the credit institution; related persons of shareholders owning above 01% of the charter capital of the credit institution; affiliate companies of the credit institution in accordance with the data of management system of the State Bank of Vietnam by the time the tax authority makes the request.”

Article 2. Replace Appendix I - Information about interrelationships and related party transactions attached to the Decree No. 132/2020/ND-CP dated November 05, 2020 of the Government on tax administration of enterprises engaged in related-party transactions with the Appendix I attached to this Decree.

Article 3. Transitional provisions

If, in the corporate income tax period for the years 2020, 2021, 2022, and 2023, the borrowing enterprise only has an interrelationship with an economic organization operating in accordance with regulations of the Law on credit institutions specified in point d clause 2 Article 5 of Decree No. 132/2020/ND-CP , the borrowing enterprise and the guaranteeing or lending enterprise specified in points d.1 and d.2 clause 2 Article 5 of Decree No. 132/2020/ND-CP , which is amended by Article 1 of this Decree, has related-party transactions within the scope specified in clause 2 Article 1 of Decree No. 132/2020/ND-CP , and the loan interest cost is not deductible as specified in point a clause 3 Article 16 of Decree No. 132/2020/ND-CP , from the tax period of 2024:

1. If the enterprise does not have interrelationship and related-party transaction as specified in the Decree No. 132/2020/ND-CP and this Decree, the loan interest cost which is not deductible or carried out to the next tax period by the end of tax period of 2023 shall be equally divided by the following tax periods of the remaining time limit for carrying forward the loan interest cost as prescribed in point b clause 3 Article 16 of the Decree No. 132/2020/ND-CP.

2. If the enterprise has interrelationship and related-party transaction as specified in the Decree No. 132/2020/ND-CP and this Decree, the loan interest cost which is not deductible or transferred to the next tax period by the end of tax period of 2023 shall be handled in accordance with point b clause 3 Article 16 of the Decree No. 132/2020/ND-CP.

Article 4. Implementation and effect

1. This Decree takes effect from March 27, 2025 and shall be applied from the corporate tax period of 2024.

2. Ministers , Heads of ministerial authorities, Heads of governmental authorities, Chairpersons of People's Committees of provinces and central-affiliated cities, related organizations and persons are responsible to implement this Decree.