Every year, Q4 is when chief accountants and CFOs of foreign-invested enterprises (FDI) start counting down to tax finalization season. For FDI companies, year-end finalization is not just filing a set of returns: it is a "full audit" of the entire financial operation — corporate income tax (CIT), personal income tax (PIT) for domestic and foreign staff, related-party transactions with parent companies and affiliates, investment project tax incentives, and a host of documents to reconcile.
2026 is a legally special year. The Corporate Income Tax Law 2025 (67/2025/QH15) took effect from 01/10/2025 and applies to the 2025 CIT tax period. Decree 255/2026/ND-CP on tax administration for related-party transactions took effect from 01/7/2026 and applies to the 2026 CIT tax period — fully replacing Decree 132/2020/ND-CP. At the same time, the Tax Administration Law 2025 (108/2025/QH15) replaced the Tax Administration Law 2019 from 01/7/2026. This means finalization for fiscal year 2026 takes place under a legal framework with many new points versus prior years.
This article guides FDI companies in preparing year-end tax finalization dossiers on a practical timeline: what the dossier contains, which deadlines must not be missed, and the 7 risk groups tax authorities scrutinize most closely in foreign-invested enterprises.
1. Year-end finalization obligations of FDI companies
First, a clear distinction: not every tax has an annual "finalization." This confusion causes many enterprises to miss obligations or, conversely, prepare unnecessary dossiers.
Corporate income tax (CIT): finalized annually. Under current rules, CIT belongs to the annually finalized group (except special cases such as CIT from capital transfers of foreign contractors, or CIT declared at a percentage on revenue per occurrence). Taxpayers must self-determine quarterly provisional CIT, offsetting provisional payments against the annual finalization amount.
Personal income tax (PIT): finalized annually. FDI companies, as income-paying organizations, must withhold, declare, and finalize on behalf of individuals in cases where individuals authorize them. At the same time, individual employees (especially foreigners working in Vietnam) may be required to finalize directly with the tax authority.
Foreign contractor tax: no annual finalization. This is a point many FDI companies get wrong. Foreign contractor tax (on payments to foreign parties such as management fees, service fees, royalties, rents) is declared, withheld, and paid per occurrence or monthly/quarterly depending on the method. However, at year-end closing, accountants must still reconcile total withheld and paid contractor tax against all contracts and payment vouchers in the year — discrepancies here are usually only discovered during inspection.
Value-added tax (VAT): filed monthly/quarterly, no annual finalization. Similarly, VAT has no annual finalization return. But finalization season is the golden time to re-review all input invoices, deduction conditions, and VAT declared during the year.
Business license fee: filed annually but not finalized. The business license fee dossier is due no later than the last day of the first month of the calendar or fiscal year. This is not a finalization dossier, but newly established FDI companies or those with charter capital changes during the year very often forget this obligation.
2. What the CIT finalization dossier contains
An FDI company's CIT finalization dossier is usually thicker than a domestic company's due to additional appendices on related-party transactions and investment incentive documents. The core components:
The CIT finalization return (Form 03/TNDN) with appendices as actually arising (business results appendix, loss carryforward appendix, CIT incentive appendix if the enterprise enjoys incentives, etc.). Figures on the return must match the audited financial statements — discrepancies between the two are among the first things tax authorities cross-check.
Annual audited financial statements (for FDI companies subject to mandatory audit). In practice, many FDI companies file finalization dossiers before the audit report is done, leading to supplementary filings later — costing fees and leaving an "adjustment" trail in tax records.
Appendix on related-party relationships and transactions (Appendix I). This is the most important new point of this finalization season. For the 2026 CIT tax period, enterprises use the new Appendix I form issued with Decree 255/2026/ND-CP (effective 01/7/2026, replacing Decree 132/2020/ND-CP and Decree 20/2025/ND-CP). Transitional note: finalization dossiers for the 2025 CIT tax period (filed by 31/3/2026 at the latest) still applied Appendix I under the old rules. Enterprises must record the correct tax period matching the finalization return, because a wrong tax period can distort the entire declared dataset.
Related-party transfer pricing documentation. This dossier (comprising the local file, master file, and country-by-country report for applicable cases) is not filed with the finalization return, but enterprises must prepare and retain it for presentation when tax authorities request during inspection. Decree 255/2026/ND-CP has raised the documentation exemption threshold for simple-function cases to revenue under VND 500 billion (previously VND 200 billion under Decree 132/2020/ND-CP). However, "exempt from documentation" does not mean "exempt from declaration" — enterprises must still declare Appendix I and meet the exemption conditions. Other thresholds and conditions in Article 20 of the Decree should be cross-checked directly against the original text before concluding exemption.
Documents evidencing CIT incentives. FDI companies enjoying tax incentives under investment projects (preferential rates, tax holidays, tax reductions) should prepare investment registration certificates, incentive approval documents, and annual incentive calculation tables — tax authorities will check whether incentive conditions remained satisfied in the finalization year (e.g., investment location conditions, incentivized business lines, project implementation progress).
3. Finalization and payment deadlines: milestones not to miss
| Obligation | Deadline | Basis |
|---|---|---|
| Annual CIT finalization dossier | No later than the last day of the 3rd month from the end of the calendar or fiscal year (normally 31/3) | Article 10 of Decree 252/2026/ND-CP (guiding Tax Administration Law 2025, 108/2025/QH15); see transitional note for the 2025 period below |
| PIT finalization dossier of individuals filing directly | No later than the last day of the 4th month from the end of the calendar year (normally 30/4) | Article 10 of Decree 252/2026/ND-CP |
| Quarterly provisional CIT | No later than the last day of the first month of the following quarter; total of 4 quarters not lower than 80% of annual finalization CIT | Article 24(2)-(3) of Decree 252/2026/ND-CP |
| Payment of remaining tax per finalization | Same deadline as the finalization dossier | General principle of tax administration law |
Note on legal transition. From 01/7/2026, the current framework for the 2026 tax period finalization season is the Tax Administration Law 2025 (108/2025/QH15) and Decree 252/2026/ND-CP (issued 30/6/2026, effective 01/7/2026) guiding its implementation. Article 10 of this Decree keeps the familiar milestones: no later than the last day of the 3rd month for tax finalization dossiers (normally 31/3), no later than the last day of the 4th month for PIT finalization dossiers of individuals filing directly (normally 30/4), and the 45th day for cases of operation termination, dissolution, or bankruptcy. Finalization dossiers for the 2025 tax period (filed by 31/3/2026 at the latest) still applied the Tax Administration Law 2019 and Decree 126/2020/ND-CP (as amended by Decree 91/2022/ND-CP) because they were filed before the new documents took effect. When preparing finalization dossiers for the 2026 tax period (filed in Q1/2027), enterprises cite Law 2025 and Decree 252/2026 directly.
Where the deadline falls on a holiday. If the last day of the tax filing deadline coincides with a statutory holiday, the deadline is the next working day. A practical example: the 2025 PIT finalization deadline for individuals filing directly fell on 30/4/2026 (a public holiday), so the actual deadline moved to the next working day. Enterprises should not cut it close but complete dossiers at least a few working days early to allow for e-filing system incidents.
The 80% provisional payment rule — the costliest trap. Under Article 24(3) of Decree 252/2026/ND-CP, total provisional CIT of the 4 quarters must not be lower than 80% of the CIT payable per annual finalization. If short, the enterprise must pay late-payment interest on the shortfall, calculated from the day after the last day of the Q4 provisional CIT deadline to the day before the remaining tax is paid into the state budget, at 0.03%/day under Article 16(2)(a) of the Tax Administration Law 2025 (108/2025/QH15). The notable point: the law does not require filing a return when making provisional payments — enterprises self-determine provisional amounts, and precisely because of this "self-determination," many enterprises pay low during the year and are "surprised" when finalization yields a large tax bill. Practical advice: from Q4, accountants need a reasonably accurate full-year profit estimate and should adjust Q4 provisional payments to reach the 80%.
4. PIT finalization: FDI-specific points
FDI companies usually have multinational workforces: foreign experts working in Vietnam, Vietnamese staff, and intra-group rotations. Each group is handled differently for PIT finalization.
The paying organization finalizes under authorization. Where individuals with salary or wage income authorize the paying organization to finalize on their behalf as prescribed, the enterprise performs the authorized finalization and bears responsibility for dossier accuracy. Authorization conditions (e.g., the individual having salary/wage income from only one place in the year) must be carefully checked case by case — wrong-scope authorization is a common error when enterprises process hundreds of employees in bulk.
Foreign individuals: determining residence status. Foreigners working in Vietnam are classified as resident or non-resident individuals, with fundamentally different tax calculations. Determination is based on days present in Vietnam (the 183-day threshold), habitual residence, and other prescribed criteria. FDI companies need to track foreign experts' travel schedules and entry/exit dates from the start of the year — chasing passports at finalization season is too late and error-prone.
Experts ending contracts and returning home. This is a very FDI-specific situation. Under Article 10 of Decree 252/2026/ND-CP (guiding the Tax Administration Law 2025), resident individuals who are foreigners ending labor contracts in Vietnam must finalize tax before departure, but no later than 45 days from the labor contract end date. Enterprises need to coordinate with the employee to complete this obligation before they leave Vietnam — if the employee has returned home before a tax shortfall is discovered, recovery and handling become extremely complicated.
Worldwide income of resident individuals. Resident individuals must finalize on taxable income arising inside and outside Vietnam's territory. For foreign experts with part of their income paid abroad by the parent company (split payroll), the Vietnamese enterprise needs to collect complete offshore income information for correct finalization — this is also a point tax authorities often ask to explain.
5. Seven most common risks in FDI finalization
Not every finalization-season error comes from fraud — most come from applying old-year inertia to a new legal framework, or missing obligations that only arise for foreign-invested enterprises. The seven risk groups below are the points tax inspections scrutinize most closely in FDI companies; each comes with practical prevention so enterprises can self-review before filing.
Risk 1: Related-party transactions and transfer pricing
This is the number-one risk for every FDI company transacting with parent companies or affiliates (raw material purchases, finished goods sales, loans, service fees, royalties…). With Decree 255/2026/ND-CP applicable to the 2026 CIT tax period, enterprises should pay special attention to:
- Declaring Appendix I fully and accurately under the new form; information on the appendix must be absolutely consistent with the finalization return and financial statements.
- The overarching principle of related-party transaction law is that transaction substance determines tax obligations, and transaction prices must follow the arm's length principle. Intra-group service fees must evidence actual benefits to the service recipient — generic fees without supporting dossiers are easily disallowed in inspection.
- Preparing related-party transfer pricing documentation (where required) before filing finalization, not waiting until tax authorities request to start collecting.
Risk 2: Management and service fees paid to the parent company
Most FDI companies pay fees to overseas parent companies: management fees, technical support fees, system usage fees… Two questions every finalization must answer:
- Is the expense deductible for CIT? Under Article 9 of the CIT Law 2025, deductible expenses must meet the conditions: actually arising and related to production/business activities, supported by lawful invoices and vouchers, and meeting non-cash payment conditions for expenses subject to it. For intra-group service fees, "lawful invoices and vouchers" is often the weak point — many enterprises have only internal debit notes, lacking detailed service contracts, cost allocation tables, and evidence of services actually provided.
- Has foreign contractor tax been withheld, declared, and paid? The Vietnamese party must withhold contractor tax before paying the foreign party. For ordinary services, the current rates are 5% VAT and 5% CIT. Where the contract provides a tax-inclusive (net) payment price, the enterprise must also recalculate (gross up) to determine the correct withholding amount. Misclassifying the fee's nature (e.g., a fee tied to royalties or technology transfer being reclassified) can lead to wrong rate application.
Risk 3: CIT incentives under investment projects
Many FDI projects enjoy CIT incentives (preferential rates, tax holidays, reductions) by investment location or incentivized business lines. The CIT Law 2025 continues the incentive framework in Article 13, while differentiating rates by revenue scale in Article 10 (20% standard; 15% and 17% for lower-revenue enterprises, based on the immediately preceding tax period's revenue). Common risks:
- No longer meeting incentive conditions in the finalization year (e.g., business line changes, unmet project progress) but still declaring incentives.
- Applying the wrong rate by not reviewing the preceding year's revenue when determining the 15%/17% rates — this error leads to arrears and late-payment interest, entirely preventable with proactive planning from early in the year.
- Lacking documents evidencing incentive conditions when tax authorities inspect.
Risk 4: Provisional payments below 80% — silently ballooning late-payment interest
As analyzed in section 3, this is a "technical" but costly risk. At 0.03%/day, late-payment interest on a large shortfall can reach hundreds of millions of VND. The only prevention is estimating full-year tax in Q4 and timely adjusting Q4 provisional payments (payment deadline: 30/01 of the following year).
Risk 5: Non-deductible expenses for missing invoices and vouchers
Beyond parent company fees, commonly disallowed expenses at finalization include: expenses without lawful invoices/vouchers, cash payments where non-cash payment is mandatory, improperly accrued expenses, and expenses exceeding prescribed norms. For FDI companies, one more specific risk group: intercompany disbursements and reimbursements within the group lacking clear contracts and reimbursement vouchers.
Risk 6: Exchange rate differences and provisions
FDI companies often book in foreign currency or have many foreign-currency transactions. Revaluing foreign-currency monetary items at period end, and provisioning and reversing provisions, both affect taxable CIT income. The general principle: follow accounting standards and current tax rules on recognition timing; improperly made provisions may be disallowed as deductible expenses. This is highly technical content; enterprises should cross-check specifically with their auditors before closing finalization figures.
Risk 7: Late filing of dossiers and tax payment
Consequences of late finalization filing include: administrative tax and invoice penalties under current rules (Decree 125/2020/ND-CP as amended by Decree 310/2025/ND-CP, effective 16/01/2026), plus 0.03%/day late-payment interest on underpaid tax (under Article 16(2)(a) of the Tax Administration Law 2025). Additionally, late-filed finalization dossiers with multiple supplementary adjustments leave a "trail" making the enterprise more likely to be selected for inspection in subsequent years. Special note: even where enterprises are granted filing deadline extensions in force majeure cases, the extension period for finalization dossiers is also limited by regulation — this should not be treated as a default "backup plan."
6. Preparation roadmap: from Q4 to end of March
A smooth finalization season always starts in Q4, not in March. Below is a reference roadmap for a fiscal year coinciding with the calendar year:
October–November: review and estimate. Review all contracts with related parties and foreign parties; check foreign contractor tax withholding and filing status; estimate full-year profit and CIT to adjust Q4 provisional payments to reach 80%; review CIT incentive conditions; track foreign experts' residence days.
December: close the figures. Inventory assets, reconcile payables (especially with related parties), confirm balances; review input invoices and VAT deduction conditions; close accruals and provisions; collect vouchers for parent company fees.
January–February: prepare reports and dossiers. Prepare financial statements (coordinating with independent auditors); draft the CIT finalization return and reconcile with financial statements; prepare Appendix I on related-party transactions under Decree 255/2026/ND-CP's new form; review deductible/non-deductible expenses; prepare transfer pricing documentation (if required); compile PIT finalization data and collect employee authorizations.
March: file dossiers and pay tax. File the CIT finalization dossier by 31/3 at the latest and pay any remaining tax; complete PIT finalization dossiers (the paying organization finalizes on behalf; individuals filing directly have until 30/4). After filing, archive all dossiers and vouchers as prescribed for later inspections.
7. Conclusion: finalization is the "map" for the whole inspection year
For FDI companies, the year-end tax finalization dossier is not just an administrative obligation — it is the "map" tax authorities use to assess risk levels and select inspection targets. A dossier carefully prepared from Q4, with consistent figures across the return, financial statements, and related-party appendices, plus complete vouchers for special expenses (parent company fees, investment incentives), helps the enterprise pass finalization season smoothly and minimizes arrears and penalty risks in later years.
With the CIT Law 2025, Decree 255/2026/ND-CP on related-party transactions, and the Tax Administration Law 2025 all being new documents, FDI companies should review their entire internal finalization process now rather than applying prior years' inertia. For complex situations — multi-tier related-party transaction structures, intra-group service fees, investment project tax incentives, or rotating foreign experts — seeking legal advice before closing finalization figures is always far cheaper than the cost of handling arrears and disputes later.
If your company needs a review of year-end tax finalization dossiers, transfer pricing and contractor tax risk assessment, or building tax compliance processes for the new fiscal year, contact FLAT Law Firm via hotline 0988424851 for advice on your company's specific case.
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