In the context of a globalized economy, businesses frequently expand their scale through the establishment of subsidiaries, affiliated companies, or intercompany transactions. However, tax control over these activities is becoming increasingly stringent. Accurately identifying the forms of related-party transactions is not only a legal compliance obligation but also a solution to help businesses effectively manage tax risks, especially as they approach the 2026 tax year with significant changes from regulatory authorities.
Legal framework for related-party transactions in 2026
To fully understand the various forms of related-party transactions, businesses first need to grasp the current legal framework. From 2026 onwards, regulations regarding tax management for businesses with related-party transactions will be based on the following two important legal documents:
- Decree 132/2020/ND-CPThe original decree regulating tax management for enterprises with related-party transactions sets out the principles for determining the price of related-party transactions at market price.
- Decree 20/2025/ND-CPThis is the most important amendment and supplement to the recently issued Decree. This Decree directly amends Clause 2, Article 5 of Decree 132, clarifying and updating the criteria for identifying affiliated parties to align with new business practices for the period from 2025-2026 onwards.
The combination of these two decrees creates a rigorous regulatory system, forcing businesses to review their entire ownership structure, capital sources, and operational relationships. In many complex cases, businesses should seek the services of specialized firms. dRelated party transaction advisory services To ensure that all operational structures comply with legal regulations, keeping up-to-date with the latest forms of related-party transactions will help accountants avoid errors during the tax settlement period.
A compilation of the 12 latest forms of affiliate transactions applicable in 2026.
Based on Clause 1, Article 1 of Decree 20/2025/ND-CP (amending Article 5 of Decree 132/2020/ND-CP), the following details the forms of related-party transactions classified by their nature to facilitate easy comparison and application by businesses.
Group 1: Linkages based on direct and indirect ownership ratios.
This is the most common group, based on specific quantitative figures regarding the owner's capital contribution or the number of shares in the business.
Hold at least 25% of owner's equity.
One business is considered to be related to another if it directly or indirectly holds at least 25% of the owner's equity in the other business. This is the most basic threshold for determining significant control or influence in related-party transactions.
Jointly held by 25% capital from a third party.
This applies if both companies have at least 25% of owner's equity directly or indirectly held by a third party. For example, if Parent Company A holds 30% of capital in Company B and also holds 30% of capital in Company C, then according to the regulations on related-party transactions, B and C are considered related parties.
The largest shareholder holds at least 10% of the total shares.
One business is the largest shareholder in terms of owner's equity and directly or indirectly holds at least 10% of the total shares of the other business.
Note that there are two parallel conditions here: The company must both be the largest shareholder and meet the minimum threshold of 10% total shares. This is a crucial point for identifying related-party transactions in joint-stock companies with dispersed capital structures.
Group 2: Links through financial relationships, loans, and guarantees.
In business practice, financial support between entities is often the clearest indicator of related-party transactions. The 2026 regulations continue to maintain stringent criteria for financial loans.
Borrowing or guaranteeing funds beyond control limits.
A business that guarantees or lends capital to another business in any form (including third-party loans secured by related-party financing and financial transactions of a similar nature) is subject to the following conditions:
- The total outstanding debt of the borrowing enterprise to the lending or guaranteeing enterprise must be at least equal to 25% of the owner's equity of the borrowing enterprise.
- At the same time, this loan must account for more than 50% of the total outstanding balance of all medium and long-term debts of the borrowing enterprise.
This is one of the forms of related-party transactions that many businesses inadvertently violate, especially newly established entities with low equity capital but large long-term debt from partner companies.
Group 3: Linkage through executive authority and appointing a board of directors.
If ownership of capital is the financial foundation, then control is the key factor determining the nature of related-party transactions from a governance perspective.
Appointing board members and policy decision-making authority.
The first enterprise appoints a member of the executive board or controlling entity of the second enterprise when the number of members appointed by the first enterprise exceeds 50% of the total number of members of the executive board or controlling entity of the second enterprise; or when only one member is appointed by the first enterprise but that person has the authority to decide on the financial policies or business operations of the second enterprise.
Both are subject to third-party management designation.
Two companies may have more than one 50% member on their board of directors, or a member on their board of directors who has the authority to decide on financial or business policies designated by a third party. This is an indirect link through the coordination of an intermediary entity, as listed in the category of related-party transactions.
Operation and control in practice
This is a broad "scanning" clause. Other cases in which a business (including independently accounting branches that declare and pay corporate income tax) is under the actual management, control, and decision-making authority of another business regarding its production and business activities will be considered as having an affiliated relationship.
Group 4: Bonds based on family relationships
This group requires the accounting department to have a thorough understanding of the backgrounds of the board members in order to accurately identify the types of related-party transactions arising between the business and the individuals involved.
Control from individuals related by blood or marriage.
The two businesses are managed or controlled in terms of personnel, finance, and business operations by individuals belonging to one of the following family relationships:
- Couple.
- Biological parents, adoptive parents, stepfather, stepmother, parents-in-law, husband's parents.
- Biological children, adopted children, stepchildren of the spouse, daughters-in-law, sons-in-law.
- Siblings with the same parents, half-siblings with the same father, half-siblings with the same mother, brother-in-law, sister-in-law, daughter-in-law of someone with the same parents or the same father but different mother, or the same mother but different father.
- Grandparents on both sides of the family.
- Grandchildren, great-grandchildren.
- Aunts, uncles, and nieces/nephews.
Individuals directly involved in management or capital contribution.
Businesses are controlled by an individual through that individual's capital contribution to the business or through that individual's direct involvement in the business's management. This is a crucial foundation for analyzing the forms of related-party transactions in family companies or private conglomerates.
Capital transfer or borrowing transactions with the controlling individual.
One new point to note in the 2026 period is that related-party relationships arise when businesses engage in transactions:
- Transfer or acquisition of capital contributions of at least 25% of the owner's capital contribution of the enterprise during the tax period.
- Borrowing or lending at least 10% of the owner's contributed capital at the time the transaction occurs during the tax period to the individual managing or controlling the business or to the individual within one of the family relationships as mentioned above.
The adjustment of the loan-to-value ratio down to 10% for controlling individuals is a significant change, expanding the scope of related-party transactions to include individual borrowing transactions.
Group 5: Special cases and credit institutions
The relationship between the head office and the permanent establishment.
Two businesses are linked as either their head office and permanent establishment, or both are permanent establishments of a foreign organization or individual. This is a specific form of association in international business operations.
Transactions within the credit institution system
Credit institutions with their subsidiaries, controlling companies, or affiliated companies are governed by the Law on Credit Institutions and its amendments, supplements, or replacements. This addition clarifies the forms of related-party transactions in the banking and finance sector, which has many unique characteristics.
See details: Is taking out a bank loan considered a related-party transaction?
Why do businesses need to properly identify related-party transactions?
Incorrectly identifying or omitting related-party transactions can lead to serious financial and legal consequences for businesses during tax audits and inspections.
Risk related to controlling interest expense (EBITDA)
According to Decree 132, businesses with related-party transactions are limited in the deductible interest expense when determining corporate income tax at the rate of 30% total net profit from business operations plus interest expense and depreciation expense (EBITDA). If the types of related-party transactions are not correctly identified, businesses may include all interest expenses as deductible costs, leading to significant tax arrears and late payment penalties later on.
The tax filing and documentation obligations are complex.
Businesses subject to related-party transactions are obligated to declare the required forms (Forms No. 01, 02, 03, 04) accompanying their corporate income tax return. Simultaneously, businesses must prepare and maintain records of transfer pricing as required by regulations. A lack of understanding of the various forms of related-party transactions can easily lead to businesses being deemed non-compliant with documentation requirements, resulting in potential tax assessments.
See details: Instructions for declaring related-party transactions on HTKK.
Risk of being directly taxed.
If the tax authorities can prove that a business engages in one of the forms of related-party transactions without declaring them, or declaring prices that do not reflect market realities for the purpose of profit shifting, the tax authorities have the right to use comparative methods to determine revenue and expenses, thereby determining the amount of tax payable. To ensure complete and accurate declaration using comparative methods, businesses should consult relevant resources. Related Party Transaction Documentation Service By consulting with specialized and experienced units, you can avoid being overcharged by the authorities.
Instructions on how to review related-party transactions for the 2026 tax year.
To best prepare for the 2026 tax year, businesses should proactively review their related-party transactions following these five steps:
- Review capital structure and shareholder list: Carefully check direct and indirect ownership ratios to compare them with the 25% and 10% thresholds as stipulated by regulations. Don't forget to identify the largest shareholder of the company.
- Statistics and analysis of loans: Compile all loans from individuals and legal entities, both domestic and foreign. Pay particular attention to loans from directors, board members, and their relatives to compare with equity ratios and determine whether any related-party transactions through financial relationships have occurred.
- Create a senior management chart: Check if executive board members hold dual roles or have decision-making authority at other partner entities. This helps identify connections through actual executive and control authority.
- Updating data on family relationships: Businesses need to proactively collect information about the family relationships of their managers. This is an important legal basis for determining which related-party transactions fall under the category of blood relations and marriage.
- In accordance with Decree 20/2025/ND-CP: Always update the latest changes regarding percentage rates and definitions of related parties to ensure that your company's tax records comply with the latest legal regulations applicable in 2026.
Conclude
Accurately identifying related-party transactions is a top priority and extremely important task in corporate tax management. With the promulgation of Decree 20/2025/ND-CP, the criteria for identifying related parties for 2026 have become more specific and comprehensive, especially in loan transactions with individuals and in the credit institution sector.
Businesses need a holistic view, not just based on ownership percentages, but also considering management, financial, and family relationships. Understanding and correctly applying the 12 forms of related-party transactions mentioned above will help businesses confidently file taxes, optimize interest expenses within acceptable limits, and most importantly, build a transparent and sustainable financial foundation. Don't let incomplete understanding of these related-party transactions cause unnecessary financial losses for your business.
For any questions regarding related-party transactions or tax policies governing them, please contact MAN – Master Accountant Network for free support and advice!
Contact information MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Frequently Asked Questions about Affiliate Transactions
To help businesses gain a deeper understanding of the importance of identifying related-party transactions, specifically:
Decree 20/2025/ND-CP has expanded the scope of control over personal loans from equity capital.
Because this record proves the business did not engage in price manipulation to evade taxes, a strict criterion in risk assessment.
If the individual manager or their relatives have a relationship as stipulated in Clause 7, Article 5, then the business will have an affiliated relationship.
Yes, if the loan amounts to 25% of equity and accounts for over 50% of total medium and long-term debt.
Form 01 must be completed and all necessary documents for determining market prices must be prepared as required.
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