{"id":2228,"date":"2025-10-05T18:44:55","date_gmt":"2025-10-06T01:44:55","guid":{"rendered":"https:\/\/giaodichlienket.man.net.vn\/?p=2228"},"modified":"2025-10-07T20:40:26","modified_gmt":"2025-10-08T03:40:26","slug":"nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket","status":"publish","type":"post","link":"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/","title":{"rendered":"Decree 20\/2017\/ND-CP on related-party transactions: A turning point in tax management and anti-transfer pricing in Vietnam"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Decree 20\/2017\/ND-CP on related party transactions was issued by the Government on February 24, 2017 and officially applied on May 1, 2017. Decree 20\/2017\/ND-CP on related party transactions sets out a legal framework to manage and regulate related party transactions in the tax field. This Decree provides many necessary contents to help businesses better understand their obligations in determining transaction prices. <\/span><span style=\"font-weight: 400;\">Join MAN \u2013 Master Accountant Network to learn more about Decree 20\/2017\/ND-CP on related-party transactions of the Government in the article below.<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Index<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewbox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewbox=\"0 0 24 24\" version=\"1.2\" baseprofile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1' ><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Tam_quan_trong_doi_voi_quan_ly_thue_phong_chong_chuyen_gia\" >Importance for tax management and transfer pricing prevention<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Pham_vi_dieu_chinh_doi_tuong_ap_dung\" >Scope of regulation and applicable subjects<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Pham_vi_dieu_chinh\" >Scope of adjustment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Doi_tuong_ap_dung\" >Applicable objects<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Nguyen_tac_ap_dung\" >Principles of application<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Quy_dinh_cac_ben_co_quan_he_lien_ket_theo_Nghi_dinh_202017ND-CP_ve_giao_dich_lien_ket\" >Regulations on related parties according to Decree 20\/2017\/ND-CP on related transactions<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Quy_dinh_ve_moi_quan_he_cua_cac_ben_co_quan_he_lien_ket_goi_chung_la_%E2%80%9Cben_lien_ket%E2%80%9D\" >Regulations on the relationship of related parties (collectively referred to as \u201crelated parties\u201d).<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Ve_cac_ben_lien_ket\" >About the affiliates\u00a0<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Nghi_dinh_202017ND-CP_ve_giao_dich_lien_ket_quy_dinh_khong_che_chi_phi_lai_vay\" >Decree 20\/2017\/ND-CP on related-party transactions regulates control of loan interest expenses\u00a0<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Co_che_chuyen_phan_chi_phi_lai_vay_vuot_tran\" >Mechanism for transferring excess interest expense<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Han_che_quy_dinh\" >Regulatory restrictions<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Moi_lien_he_voi_Nghi_dinh_1322020ND-CP\" >Relationship with Decree 132\/2020\/ND-CP<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#So_sanh_Nghi_dinh_202017ND-CP_ve_giao_dich_lien_ket_ve_giao_dich_lien_ket_va_Nghi_dinh_1322020ND-CP\" >Comparison of Decree 20\/2017\/ND-CP on related party transactions and Decree 132\/2020\/ND-CP<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Ket_luan\" >Conclude\u00a0<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/nghi-dinh-20-2017-nd-cp-ve-giao-dich-lien-ket\/#Thong_tin_lien_he_MAN_%E2%80%93_Master_Accountant_Network\" >Contact information MAN \u2013 Master Accountant Network<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Tam_quan_trong_doi_voi_quan_ly_thue_phong_chong_chuyen_gia\"><\/span><b>Importance for tax management and transfer pricing prevention<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><a href=\"https:\/\/thuvienphapluat.vn\/van-ban\/Doanh-nghiep\/Nghi-dinh-20-2017-ND-CP-quan-ly-thue-doi-voi-doanh-nghiep-co-giao-dich-lien-ket-340892.aspx\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">Decree 20\/2017\/ND-CP<\/span><\/a><span style=\"font-weight: 400;\"> about <\/span><a href=\"https:\/\/giaodichlienket.man.net.vn\/en\/tong-quan-giao-dich-lien-ket-2025\/\"><span style=\"font-weight: 400;\">affiliate transactions<\/span><\/a><span style=\"font-weight: 400;\"> This is of particular importance in tax management and transfer pricing prevention in Vietnam. Before this decree was issued, related party transactions often lacked transparency, creating conditions for some businesses to take advantage of transferring profits abroad, reducing their actual tax obligations. This not only caused budget losses but also created inequality in the business environment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For businesses, Decree 20\/2017\/ND-CP on related-party transactions creates a clear legal framework: declaration obligations, limits on interest expenses, and cross-border profit reporting responsibilities. By complying with regulations, businesses not only limit legal risks but also build a transparent tax management strategy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Decree 20\/2017\/ND-CP on related-party transactions contributes significantly to protecting State budget revenues, creating a fair investment environment, and at the same time aligning Vietnam with international standards on preventing base erosion and profit shifting (BEPS). This is the foundation for the sustainable development of the tax administration system.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Pham_vi_dieu_chinh_doi_tuong_ap_dung\"><\/span><b>Scope of regulation and applicable subjects<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Within the framework of regulations on tax management for enterprises with related-party transactions, Decree 20\/2017\/ND-CP has clearly defined the scope of regulation and applicable subjects, serving as a legal basis for declaration and determination of transfer pricing. First of all, it is necessary to specifically consider the scope of regulation of Decree 20\/2017\/ND-CP on related-party transactions to clearly understand the contents regulated by this Decree and the conditions applicable to enterprises with related-party relationships.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Pham_vi_dieu_chinh\"><\/span><b>Scope of adjustment<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<figure id=\"attachment_2230\" aria-describedby=\"caption-attachment-2230\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-2230\" src=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket-quy-dinh-pham-vi-dieu-chinh.jpg\" alt=\"Ngh\u1ecb \u0111\u1ecbnh 20\/2017\/N\u0110-CP v\u1ec1 giao d\u1ecbch li\u00ean k\u1ebft quy \u0111\u1ecbnh ph\u1ea1m vi \u0111i\u1ec1u ch\u1ec9nh\" width=\"1200\" height=\"800\" srcset=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket-quy-dinh-pham-vi-dieu-chinh.jpg 1200w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket-quy-dinh-pham-vi-dieu-chinh-300x200.jpg 300w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket-quy-dinh-pham-vi-dieu-chinh-1024x683.jpg 1024w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket-quy-dinh-pham-vi-dieu-chinh-768x512.jpg 768w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket-quy-dinh-pham-vi-dieu-chinh-18x12.jpg 18w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-2230\" class=\"wp-caption-text\">Decree 20\/2017\/ND-CP on related-party transactions stipulates the scope of regulation.<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">Decree 20\/2017\/ND-CP on related-party transactions provides a comprehensive legal framework for tax management for enterprises with related-party transactions. Specifically, the decree clearly stipulates the principles, methods, procedures and processes for determining the price of related-party transactions based on economic nature, ensuring consistency with market prices. At the same time, this document also sets out the obligations of taxpayers in declaring and determining the price of related-party transactions, as well as fully declaring and paying taxes. In addition, the decree also stipulates the responsibilities of state management agencies in monitoring, checking and inspecting taxes for enterprises with related-party activities, thereby limiting transfer pricing and budget losses.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The scope of Decree 20\/2017\/ND-CP on related-party transactions includes all transactions arising in the production and business process between related parties as prescribed in Article 5 of the Decree. However, some specific transactions such as the purchase and sale of goods and services subject to State price management will be carried out according to separate provisions of the law on prices, not within the scope of application of this Decree.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Doi_tuong_ap_dung\"><\/span><b>Applicable objects<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">In addition to the scope of regulation, Decree 20\/2017\/ND-CP also clearly stipulates the subjects of application, in order to identify organizations and individuals responsible for performing obligations related to related-party transactions. Specifically including:<\/span><\/p>\n<figure id=\"attachment_2231\" aria-describedby=\"caption-attachment-2231\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-2231\" src=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017-ve-giao-dich-lien-ket-quy-dinh-doi-tuong-ap-dung.jpg\" alt=\"Ngh\u1ecb \u0111\u1ecbnh 20\/2017\/N\u0110-CP v\u1ec1 giao d\u1ecbch li\u00ean k\u1ebft quy \u0111\u1ecbnh \u0111\u1ed1i t\u01b0\u1ee3ng \u00e1p d\u1ee5ng\" width=\"1200\" height=\"800\" srcset=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017-ve-giao-dich-lien-ket-quy-dinh-doi-tuong-ap-dung.jpg 1200w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017-ve-giao-dich-lien-ket-quy-dinh-doi-tuong-ap-dung-300x200.jpg 300w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017-ve-giao-dich-lien-ket-quy-dinh-doi-tuong-ap-dung-1024x683.jpg 1024w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017-ve-giao-dich-lien-ket-quy-dinh-doi-tuong-ap-dung-768x512.jpg 768w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Nghi-dinh-20_2017-ve-giao-dich-lien-ket-quy-dinh-doi-tuong-ap-dung-18x12.jpg 18w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-2231\" class=\"wp-caption-text\">Decree 20\/2017\/ND-CP on related-party transactions stipulates the subjects of application.<\/figcaption><\/figure>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Units that produce and trade goods and services (collectively referred to as taxpayers) are subject to corporate income tax (CIT) and have transactions with related parties as prescribed in Article 5 of Decree 20\/2017\/ND-CP on related party transactions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">General Department of Taxation, Tax Department and Tax Branch<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Other relevant State agencies, organizations and individuals<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">After clearly defining the scope of regulation and applicable subjects, Decree 20\/2017\/ND-CP on related-party transactions continues to specifically stipulate the responsibilities of taxpayers and the authority of tax authorities in managing, declaring and determining transfer pricing, in order to ensure transparency and fairness in tax obligations.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Nguyen_tac_ap_dung\"><\/span><b>Principles of application<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Decree 20\/2017\/ND-CP on related-party transactions, taxpayers when having related-party transactions are responsible for fully declaring and eliminating factors that may reduce tax obligations due to the influence of related-party relationships.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For tax authorities, Decree 20\/2017\/ND-CP on related-party transactions empowers them to manage, inspect and closely examine the transfer pricing of taxpayers. Tax authorities apply the principle of independent transactions and the principle of \u201csubstance over form\u201d to eliminate related-party transactions that reduce the tax obligations of enterprises. When necessary, tax authorities can adjust the price of related-party transactions to accurately and fully determine tax obligations to the state budget.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The principle of arm\u2019s length trading is applied consistently according to international standards, based on the provisions of the Double Taxation Avoidance Agreement that Vietnam has signed. This ensures transparency and creates a fair competitive environment between domestic enterprises and foreign-invested enterprises.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Quy_dinh_cac_ben_co_quan_he_lien_ket_theo_Nghi_dinh_202017ND-CP_ve_giao_dich_lien_ket\"><\/span><b>Regulations on related parties according to Decree 20\/2017\/ND-CP on related transactions<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">To accurately identify the parties covered by Decree 20\/2017\/ND-CP, identifying the relationship between related parties is an important factor. The Decree has specifically regulated the types of relationships considered to be related, serving as a basis for declaring, determining prices and tax obligations of enterprises.<\/span><\/p>\n<figure id=\"attachment_2232\" aria-describedby=\"caption-attachment-2232\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-2232\" src=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Quy-dinh-cac-ben-co-quan-he-lien-ket-theo-Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket.jpg\" alt=\"Quy \u0111\u1ecbnh c\u00e1c b\u00ean c\u00f3 quan h\u1ec7 li\u00ean k\u1ebft theo Ngh\u1ecb \u0111\u1ecbnh 20\/2017\/N\u0110-CP v\u1ec1 giao d\u1ecbch li\u00ean k\u1ebft\" width=\"1200\" height=\"800\" srcset=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Quy-dinh-cac-ben-co-quan-he-lien-ket-theo-Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket.jpg 1200w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Quy-dinh-cac-ben-co-quan-he-lien-ket-theo-Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket-300x200.jpg 300w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Quy-dinh-cac-ben-co-quan-he-lien-ket-theo-Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket-1024x683.jpg 1024w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Quy-dinh-cac-ben-co-quan-he-lien-ket-theo-Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket-768x512.jpg 768w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/10\/Quy-dinh-cac-ben-co-quan-he-lien-ket-theo-Nghi-dinh-20_2017_ND-CP-ve-giao-dich-lien-ket-18x12.jpg 18w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-2232\" class=\"wp-caption-text\">Regulations on related parties according to Decree 20\/2017\/ND-CP on related transactions<\/figcaption><\/figure>\n<h4><span class=\"ez-toc-section\" id=\"Quy_dinh_ve_moi_quan_he_cua_cac_ben_co_quan_he_lien_ket_goi_chung_la_%E2%80%9Cben_lien_ket%E2%80%9D\"><\/span><b>Regulations on the relationship of related parties (collectively referred to as \u201crelated parties\u201d).<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">According to the provisions of Decree 20\/2017\/ND-CP on related-party transactions, parties are considered to have a related-party relationship when there exists between them a dominance, control or participation in capital, investment and management in any form. Specifically, including the following cases:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A party directly or indirectly involved in the management, control, capital contribution or investment in the other party.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Parties are jointly under the management, control, capital contribution or investment of another party (directly or indirectly).<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">From the above provisions, it can be seen that related parties not only include enterprises in the same corporation or parent company - subsidiary, but also extend to many other entities that have a relationship of mutual control, investment or management according to the provisions of Decree 20\/2017\/ND-CP on related transactions.<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Ve_cac_ben_lien_ket\"><\/span><b>About the affiliates<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Decree 20\/2017\/ND-CP on related party transactions, <a href=\"https:\/\/giaodichlienket.man.net.vn\/en\/moi-quan-he-lien-ket\/\">affiliated relationship<\/a> determined when there is significant control over capital, finance or management between businesses or between businesses and individuals. Specifically:<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\">\u201cAn enterprise directly or indirectly holds at least 25% of the capital contribution of the owner of the other enterprise;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Both enterprises have at least 25% of owner&#039;s equity held directly or indirectly by a third party;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">An enterprise is the largest shareholder in terms of equity capital of the other enterprise, directly or indirectly holding at least 10% of the total shares of the other enterprise;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">An enterprise guarantees or lends capital to another enterprise in any form (including loans from third parties secured by the financial resources of the related party and financial transactions of a similar nature) on the condition that the loan amount is at least equal to 25% of the capital contribution of the owner of the borrowing enterprise and accounts for more than 50% of the total value of the medium- and long-term debts of the borrowing enterprise;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">An enterprise appoints a member of the executive board or controlling authority of another enterprise provided that the number of members appointed by the first enterprise accounts for more than 50% of the total number of members of the executive board or controlling authority of the second enterprise; or a member appointed by the first enterprise has the right to decide on the financial policies or business activities of the second enterprise;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Two businesses have more than 50% members on the board of directors or have one member on the board of directors with the right to decide on financial policies or business operations appointed by a third party;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Two enterprises are operated or controlled in terms of personnel, finance and business operations by individuals in one of the following relationships: husband, wife, biological father, adoptive father, biological mother, adoptive mother, biological child, adopted child, biological brother, biological sister, biological sibling, brother-in-law, brother-in-law, sister-in-law, paternal grandfather, paternal grandmother, paternal grandchild, maternal grandfather, maternal grandmother, maternal grandchild, paternal aunt, paternal uncle, maternal aunt, paternal aunt and paternal niece or nephew;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Two business establishments have a head office and permanent establishment relationship or are both permanent establishments of foreign organizations or individuals;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">One or more enterprises are controlled by an individual through the individual&#039;s capital contribution to that enterprise or direct participation in the operation of the enterprise;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Other cases in which an enterprise is subject to the actual management and control of the other enterprise&#039;s business operations.\u201d<\/span><\/p>\n<p><b>Source:<\/b> <a href=\"https:\/\/thuvienphapluat.vn\/van-ban\/Doanh-nghiep\/Nghi-dinh-20-2017-ND-CP-quan-ly-thue-doi-voi-doanh-nghiep-co-giao-dich-lien-ket-340892.aspx\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">Article 5 of Decree 20\/2017\/ND-CP<\/span><\/a><span style=\"font-weight: 400;\">\u00a0<\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">In general, any case showing actual domination or control over the production and business activities of another enterprise is considered an affiliated relationship according to regulations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Not only stopping at determining related-party relationships, Decree 20\/2017\/ND-CP on related-party transactions also regulates controlling loan interest expenses to limit the risk of thin capital and optimize tax management.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Nghi_dinh_202017ND-CP_ve_giao_dich_lien_ket_quy_dinh_khong_che_chi_phi_lai_vay\"><\/span><b>Decree 20\/2017\/ND-CP on related-party transactions regulates control of loan interest expenses\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Decree 20\/2017\/ND-CP on related party transactions regulates the control of interest expenses. Specifically, the decree stipulates:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Total net interest expense (interest expense after deducting deposit interest and loan interest) of an enterprise that is deductible when calculating corporate income tax does not exceed 20% of total net profit from business operations plus interest expense and depreciation expense (similar to EBITDA indicator).<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In other words, a business can only calculate a maximum of 20% of net interest expenses into deductible expenses, the excess amount will not be deductible when determining taxable income.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Co_che_chuyen_phan_chi_phi_lai_vay_vuot_tran\"><\/span><b>Mechanism for transferring excess interest expense<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The interest expense exceeding the 20% limit is not completely lost, but is carried forward to the next tax period (up to 5 years). Therefore, the enterprise still has the opportunity to record this expense in the future if it has a profit large enough to absorb the excess amount.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Han_che_quy_dinh\"><\/span><b>Regulatory restrictions<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Decree 20\/2017\/ND-CP on related-party transactions is the first legal document at the Decree level issued by the Government to manage taxes on related-party transactions and prevent transfer pricing. The issuance of this Decree marks an important step forward in bringing Vietnam&#039;s regulations closer to international practices, in the context of increasingly sophisticated and complex transfer pricing and tax avoidance behaviors of multinational corporations.<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\">\u201c<\/span><span style=\"font-weight: 400;\">The current corporate income tax policy provides for tax incentives and exemptions for industries, sectors, and localities. Corporations take advantage of differences in tax rates, incentives, and tax exemptions to transfer profits between domestic corporations to evade taxes. In addition, some domestic corporations also arrange transactions and transfer pricing to transfer profits to corporations that are operating at a loss (with losses to be transferred); transfer profits from profitable enterprises to loss-making enterprises to evade taxes.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Transfer pricing and profit transfer not only occur in FDI enterprises but also appear in domestic enterprises because even in domestic operations, Vietnamese enterprises have invested in many industries and fields such as trade, services, production... Obviously, even domestically, there is a phenomenon of transferring profits from enterprises and locations with high tax rates to enterprises and locations with low tax rates; transferring profits from profitable enterprises to loss-making enterprises&quot;<\/span><\/p>\n<p><b>References:<\/b> <a href=\"https:\/\/portal.mof.gov.vn\/webcenter\/portal\/btcvn\/pages_r\/l\/tin-bo-tai-chinh?dDocName=MOFUCM198657\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">Ministry of Finance<\/span><\/a><\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"Moi_lien_he_voi_Nghi_dinh_1322020ND-CP\"><\/span><b>Relationship with Decree 132\/2020\/ND-CP<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Decree 20\/2017\/ND-CP on related-party transactions has revealed some limitations, especially the regulation on controlling loan interest expenses at 20%, causing difficulties for many businesses, as well as not being really flexible in applying to each specific case.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The connection between Decree 20\/2017\/ND-CP on related-party transactions and Decree 132\/2020\/ND-CP is shown in that: Decree 132\/2020\/ND-CP inherits the basic principles of Decree 20\/2017\/ND-CP on anti-transfer pricing and tax management for related-party transactions, but at the same time has important adjustments to better suit reality.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"So_sanh_Nghi_dinh_202017ND-CP_ve_giao_dich_lien_ket_ve_giao_dich_lien_ket_va_Nghi_dinh_1322020ND-CP\"><\/span><b>Comparison of Decree 20\/2017\/ND-CP on related party transactions and Decree 132\/2020\/ND-CP<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">In the process of tax management for related-party transactions, Decree 20\/2017\/ND-CP on related-party transactions is considered the first legal basis. However, the implementation has revealed many limitations, especially the regulation on controlling loan interest expenses 20%. To overcome and approach international practice, the Government issued Decree 132\/2020\/ND-CP with many important innovations. The table below will help you clearly visualize the differences and connections between these two decrees.<\/span><\/p>\n<table style=\"width: 100%; border-color: #000000; height: 536px;\" border=\"1\" cellspacing=\"2\" cellpadding=\"12\">\n<tbody>\n<tr style=\"height: 56px;\">\n<td style=\"height: 56px; text-align: center;\"><b>Criteria\u00a0<\/b><\/td>\n<td style=\"height: 56px; text-align: center;\"><b>Decree 20\/2020\/ND-CP<\/b><\/td>\n<td style=\"height: 56px; text-align: center;\"><b>Decree 32\/2020\/ND-CP<\/b><\/td>\n<td style=\"height: 56px; text-align: center;\"><b>Change points and significance\u00a0<\/b><\/td>\n<\/tr>\n<tr style=\"height: 80px;\">\n<td style=\"height: 80px;\">Main objective<\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Anti-transfer pricing, tax management with related transactions<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Perfecting the mechanism, in line with international practices (BEPS), reducing shortcomings of Decree 20<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Increase transparency, balance interests<\/span><\/td>\n<\/tr>\n<tr style=\"height: 80px;\">\n<td style=\"height: 80px;\">Control interest costs<\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Up to 20% EBITDA<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Up to 30% EBITDA<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Support businesses, reduce loan burden<\/span><\/td>\n<\/tr>\n<tr style=\"height: 80px;\">\n<td style=\"height: 80px;\">Transfer pricing determination dossier<\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Requested to be established, but not yet synchronized<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Clearly defined according to BEPS standards: Local file, Master file, CbCR<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Transparency, international integration<\/span><\/td>\n<\/tr>\n<tr style=\"height: 80px;\">\n<td style=\"height: 80px;\">Country-by-Country Reporting (CbCR)<\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Yes, but not in detail<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Clearly stated: The parent company in Vietnam with revenue \u226518,000 billion must pay<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Clear multinational corporate responsibility<\/span><\/td>\n<\/tr>\n<tr style=\"height: 80px;\">\n<td style=\"height: 80px;\">Principles of application<\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Independent transaction, nature determines form<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Inheriting the principles of Decree 20, but more detailed and stricter<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Increase the effectiveness of anti-transfer pricing<\/span><\/td>\n<\/tr>\n<tr style=\"height: 80px;\">\n<td style=\"height: 80px;\">Impact on business<\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Being reflected causes difficulties, especially regulation 20% loan interest<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">More open, but still tightening anti-transfer pricing<\/span><\/td>\n<td style=\"height: 80px;\"><span style=\"font-weight: 400;\">Balance between management &amp; business support<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">Through the comparison table, it can be seen that Decree 132\/2020\/ND-CP not only inherits the foundation from Decree 20\/2017\/ND-CP on related-party transactions but also completes and adjusts many regulations to be more suitable to reality. These changes help businesses have a clear and transparent legal basis in declaring and determining transfer pricing, while creating conditions for tax authorities to enhance management efficiency and prevent budget losses.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Ket_luan\"><\/span><b>Conclude<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Decree 20\/2017\/ND-CP on related-party transactions plays an important foundational role in establishing the first legal framework on tax management for related-party transactions and anti-transfer pricing in Vietnam. Although it was later inherited and supplemented by Decree 132\/2020\/ND-CP, the initial provisions of Decree 20\/2017\/ND-CP on related-party transactions have created a premise to enhance transparency and fairness in production and business activities, while limiting transfer pricing and loss of State budget revenue. Proper and full compliance with the provisions of this Decree not only helps businesses minimize legal risks, but also contributes to building a sustainable, healthy investment environment in accordance with international practices.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For specific advice, businesses please contact <\/span><a href=\"https:\/\/man.net.vn\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">MAN \u2013 Master Accoutant Network<\/span><\/a><span style=\"font-weight: 400;\"> via:<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Thong_tin_lien_he_MAN_%E2%80%93_Master_Accountant_Network\"><\/span><b>Contact information <a href=\"https:\/\/man.net.vn\" rel=\"nofollow noopener\" target=\"_blank\">MAN \u2013 Master Accountant Network<\/a><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li aria-level=\"1\"><span style=\"font-weight: 400;\">Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City.<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Mobile\/zalo: +84 (0) 903 428 622 (Ms. Ngan)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">E-mail: <\/span><a href=\"mailto:man@man.net.vn\"><span style=\"font-weight: 400;\">man@man.net.vn<\/span><\/a><\/li>\n<\/ul>\n<p style=\"text-align: right;\"><b>Editor MAN \u2013 Master Accountant Network<\/b><\/p>","protected":false},"excerpt":{"rendered":"<p>Ngh\u1ecb \u0111\u1ecbnh 20\/2017\/N\u0110-CP v\u1ec1 giao d\u1ecbch li\u00ean k\u1ebft v\u1ec1 giao d\u1ecbch li\u00ean k\u1ebft \u0111\u01b0\u1ee3c Ch\u00ednh ph\u1ee7 ban h\u00e0nh ng\u00e0y 24\/02\/2017 v\u00e0 ch\u00ednh th\u1ee9c \u0111\u01b0\u1ee3c \u00e1p d\u1ee5ng v\u00e0o ng\u00e0y 01\/05\/2017. Ngh\u1ecb \u0111\u1ecbnh 20\/2017\/N\u0110-CP v\u1ec1 giao d\u1ecbch li\u00ean k\u1ebft \u0111\u1eb7t ra khung ph\u00e1p l\u00fd, nh\u1eb1m qu\u1ea3n l\u00fd v\u00e0 \u0111i\u1ec1u ch\u1ec9nh c\u00e1c giao d\u1ecbch li\u00ean k\u1ebft trong l\u0129nh [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":2229,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2228","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"_links":{"self":[{"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/posts\/2228","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/comments?post=2228"}],"version-history":[{"count":3,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/posts\/2228\/revisions"}],"predecessor-version":[{"id":2256,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/posts\/2228\/revisions\/2256"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/media\/2229"}],"wp:attachment":[{"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/media?parent=2228"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/categories?post=2228"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/tags?post=2228"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}