Scenario: an FDI electronics-parts maker in Bac Ninh, VND 1,200 billion in revenue, sourcing 80% of materials from its Korean parent. The chief accountant asks: “we hear three-tier TP documentation is required — are we covered, what do we prepare, and when?” The answer sits in Decree 255/2026/ND-CP — replacing Decree 132/2020 from 01/7/2026 and applying from CIT year 2026.
What are the three tiers?
Under Articles 19 and 20 of Decree 255/2026/ND-CP, related-party pricing documentation has three tiers:
- Tier 1 — Master file: the group-wide picture: organisational structure, value chain, key intangibles, the group’s transfer pricing policy, consolidated financials. Purpose: to show the Vietnamese tax authority where the local subsidiary sits in the global picture.
- Tier 2 — Local file: the heart of Vietnamese compliance: detailed description of each related-party transaction of the Vietnamese company, functional-asset-risk (FAR) analysis, chosen pricing method, and benchmarking proving arm’s length pricing.
- Tier 3 — Country-by-country report (CbCR): a per-jurisdiction table of revenue, profit, taxes paid, headcount and assets for the whole group. Only for large groups (see thresholds).
Who must prepare? Thresholds
CbCR (Article 19): mandatory only where the group’s consolidated global revenue reaches EUR 750 million (about VND 20,250 billion). Below that, no CbCR.
Master + local file (Article 20): the general rule is that taxpayers with related-party transactions must prepare them, except:
- Revenue below VND 500 billion for the period, no intangible-related revenue or costs, and minimum net-margin ratios by sector: distribution 5%+, manufacturing 10%+, processing 15%+;
- Other specific cases listed by the decree (e.g. transactions already covered by an effective APA for the same transaction).
Key caveat: documentation exemption does not waive disclosure — the company must still declare related-party transactions in Appendix I with the CIT finalisation return and must still price at arm’s length.
Preparation and retention deadlines
Documentation must be prepared before the CIT finalisation filing deadline (in practice, before 31 March of the following year for calendar-year taxpayers) and produced on tax audit. There is no periodic “filing” with the authority — but failure to produce it when the audit team asks is treated like non-preparation.
Sanctions for missing or deficient documentation
Non-preparation, incomplete preparation, or figures that fail to evidence arm’s length pricing are grounds for tax reassessment — the authority re-prices, recomputes taxable income and collects arrears plus administrative penalties and late-payment interest. Decree 255/2026 adds misdeclared Appendix I information as a further reassessment trigger.
FAQs
One small related-party transaction — must we prepare all three tiers?
Not necessarily. Obligations follow per-tier thresholds: no CbCR below the CbCR threshold; no master/local file if the exemption applies. But even small transactions must be disclosed in Appendix I and priced at arm’s length.
Group master file is in English — translate into Vietnamese?
When produced to the audit team, foreign-language documents need accompanying Vietnamese translations on request. Best practice: pre-translate the Vietnam-relevant sections.
Parent already filed CbCR abroad — must the Vietnamese subsidiary re-file?
No re-filing if Vietnam receives it via information exchange. The subsidiary may still owe a notification of the filing entity.
Exempt last year, revenue over VND 500 billion this year?
Obligations are assessed per tax period. A period that no longer meets the exemption must be fully documented. Fast-growing businesses should monitor thresholds from the start of the fiscal year.
This article has been quality-reviewed by the FLAW AI Legal Council
