What must FDI enterprises with related-party transactions do about transfer pricing?
From 01/07/2026, Vietnam’s legal framework for tax administration of related-party transactions entered a new chapter: Decree No. 255/2026/ND-CP (issued 30/06/2026) took effect, simultaneously replacing Decree No. 132/2020/ND-CP and Decree No. 20/2025/ND-CP, applicable from the 2026 CIT tax year.
For FDI enterprises — the group with the highest share of transactions with overseas parents and affiliates — this is essential reading. This article maps the declaration and transfer-pricing documentation duties and the new exemption thresholds.
When is a related-party relationship established? (Article 5)
Decree 255/2026 lists the cases constituting related-party relationships; the most common for FDI include:
- One enterprise directly or indirectly holding at least 25% of the capital of another enterprise;
- Two enterprises both having at least 25% of capital held by the same third party;
- An enterprise guaranteeing or lending at scales meeting prescribed capital-to-debt ratios;
- Enterprises under the management or control of the same individual or persons with family ties;
- New: relationships through borrowing/lending of assets (Decree 132 covered only monetary loans).
Declaration and documentation duties (Article 18)
Enterprises with related-party transactions must:
- Declare full information on related-party relationships and transactions together with the annual CIT finalization dossier (per Appendix I of the Decree);
- Prepare and retain transfer-pricing documentation — the Local file, the Master file and the Country-by-Country Report (CbCR, if applicable) — before the annual tax finalization filing deadline;
- Demonstrate the basis for the chosen pricing method; furnish complete dossiers upon request during tax audits, inspections or consultations.
The overarching principle: declaring and pricing related-party transactions must not reduce the CIT liability payable in Vietnam.
Who is exempt from preparing documentation? (Article 20.2)
Note: exemption from preparing documentation does not exempt the enterprise from declaring Appendix I. Three exemption cases:
- (a) Total revenue below VND 50 billion and total related-party transaction value below VND 30 billion;
- (b) All related parties are in Vietnam, subject to the same CIT rate, and none enjoys tax incentives;
- (c) No revenue/costs from exploiting intangible assets, revenue below VND 500 billion (raised from 200 billion under Decree 132) and meeting minimum net profit margins by function: distribution ≥5%, manufacturing ≥10%, toll manufacturing ≥15% (on net revenue, before interest and CIT).
Interest expense cap: 30% of EBITDA (Article 16.3)
Total deductible interest expense of an enterprise with related-party transactions must not exceed 30% of net operating profit plus net interest expense plus depreciation for the period. The excess may be carried forward up to 5 tax years. FDI enterprises borrowing from their parents should model this carefully.
Country-by-Country Reporting — CbCR (Article 19)
An ultimate parent company in Vietnam with consolidated global revenue of EUR 750 million or more must prepare and file a CbCR (Appendix IV). Vietnamese enterprises whose ultimate parent abroad meets the equivalent threshold have related obligations. The EUR 750 million threshold follows the international standard.
Pricing methods (Article 13)
The Decree sets the priority order of comparable data sources and the comparable uncontrolled price method: related-party prices are benchmarked against independent-transaction prices with comparable product characteristics and contract terms; material differences affecting price must be eliminated.
Compliance checklist for FDI enterprises
- Review ownership charts and loans/guarantees to identify related-party relationships under Article 5;
- Determine whether the documentation exemption (Article 20.2) applies — if not, prepare Local/Master files before the tax finalization deadline;
- Model the 30% EBITDA interest cap and carry-forward plan;
- Check the group’s EUR 750 million CbCR threshold;
- Remember: Decree 255/2026 applies from the 2026 CIT tax year — 2025 and earlier remain under Decree 132/2020.
Article quality-reviewed by the FLAW AI Legal Council. For reference only; not a substitute for legal advice on specific cases.