THE DECREE NO. 20/2025/ND-CP DATED FEBRUARY 10, 2025 OF THE GOVERNMENT AMENDING AND SUPPLEMENTING THE DECREE NO. 132/2020/ND-CP ON REGULATING TAX MANAGEMENT FOR ENTERPRISES WITH RELATED TRANSACTIONS 

After the period of publicizing the Draft Decree amending Decree No. 132/2020/ND-CP (Decree 132) dated November 5, 2020 of the Government regulating tax management for enterprises with related-party transactions to collect opinions from ministries, branches and the business community, the Government officially issued the Decree No. 20/2025/ND-CP (Decree 20) amending and supplementing Decree 132 on February 10, 2025. The main amendments and supplements of Decree 20 are summarized below: 

1. Decree 20 supplements the case of excluding enterprises that guarantee or lend to other enterprises as prescribed in Point d, Clause 2, Article 5 of Decree 132. Accordingly, the lenders, the guarantors being the credit institutions are not considered as affiliated parties if they do not participate in the activities of “operation, control, capital contribution, investment” at the borrowing enterprise or the guaranteed enterprise.

 => This is the most notable content of this revised Decree. Previously, Decree 132 caused obstacles for many enterprises when borrowing capital from banks to serve production and business activities, accidentally falling into the case of determining the affiliated relationship and having to bear the control level of deductible interest expenses, while the enterprise and the bank are completely independent, without control, management, operation, capital contribution, or investment in the production and business activities of the enterprise. 

2. Decree 20 clarifies the responsibility for declaring and paying taxes for independent accounting branches with related relationships (previously not clearly regulated). 

3. Decree 20 supplements cases of related relationships to synchronize with changes in the Law on Credit Institutions: Credit institutions and Subsidiaries or Controlling Companies or Associate Companies of credit institutions as prescribed in the Law on Credit Institutions and amended, supplemented or replaced documents (if any); 

4. In addition, the Decree clarifies the provisions on transferring non-deductible interest expenses of previous tax periods when the enterprise only has a related relationship through borrowing capital from a credit institution according to Point d, Clause 2, Article 5, Decree 132. 

• In case an enterprise has no related-party relationship and does not have related-party transactions as prescribed in Decree 132 and Decree 20, the non-deductible interest expense that has not been transferred to the following tax periods as of the end of the 2023 tax period shall be evenly distributed to the following consecutive tax periods for no more than 05 years from the year following the year in which the non-deductible interest expense arises. 

• In case an enterprise has related relationships and related transactions in the 2024 tax period, non-deductible interest expenses of previous tax periods cannot be carried forward to the next 5 years. 

5. Decree 20 also extends the responsibility of the State Bank of Vietnam in providing information of the related individuals and related enterprises of credit institutions upon request from the Tax Authority.  

6. At the same time, Decree 20 amends Appendix I – Information of related party relationships and related-party transactions to align with the amended, supplemented regulations mentioned above.  

Decree 20 is officially issued on February 10, 2025 and applied from the 2024 tax period.