Not every enterprise with related-party transactions must prepare full transfer pricing documentation. From the 2026 CIT tax year, Decree 255/2026/ND-CP has significantly expanded the documentation exemption — but “exempt from preparing” does not mean “exempt from declaring”.
This article helps businesses determine which category they fall into and what their specific obligations are.
1. What transfer pricing documentation includes
Transfer pricing documentation is the set of records proving that transactions between related parties follow the arm’s length principle (market pricing), comprising three tiers:
- Local File: detailed information on the Vietnamese enterprise and its related-party transactions;
- Master File: group-wide information on the multinational group (organizational structure, business operations, intangibles, finances);
- Country-by-Country Report (CbCR): data on the group’s revenue, profit and taxes paid allocated by jurisdiction.
2. Three documentation exemptions (Article 20, Decree 255/2026/ND-CP)
An enterprise is exempt from preparing the Local File if it falls into one of three cases:
- Case 1: revenue in the tax period below VND 50 billion and total related-party transactions below VND 30 billion;
- Case 2: all related parties are taxpayers in Vietnam, subject to the same CIT rate, and none enjoys tax incentives;
- Case 3: no revenue or expenses from intangibles, revenue below VND 500 billion, and meeting minimum net profit margins by function — distribution at least 5%, manufacturing at least 10%, processing at least 15%.
Notably, the Case 3 threshold rises from VND 200 billion (under the now-expired Decree 132/2020/ND-CP) to VND 500 billion, and the “simple functions” condition is removed — significantly widening the exempt population.
3. Exempt from preparing does not mean exempt from declaring
This is the most commonly misunderstood point. Even when exempt from preparing transfer pricing documentation, an enterprise must still declare information on related-party relationships and transactions in the new Appendix issued with Decree 255/2026/ND-CP when filing its CIT finalization return.
Failure to declare, or incorrect declaration, may still attract administrative tax penalties and tax imposition.
4. Who must file the Country-by-Country Report
An ultimate parent company in Vietnam with consolidated global revenue of EUR 750 million or more must prepare and file the CbCR (Article 19 of Decree 255/2026/ND-CP). Vietnamese enterprises whose foreign ultimate parent meets the equivalent threshold have related obligations as prescribed.
5. Notes as Decree 132/2020 expires
Decree 255/2026/ND-CP (effective 1 July 2026, applicable from the 2026 CIT tax year) replaces Decree 132/2020/ND-CP and Decree 20/2025/ND-CP. Enterprises should:
- Use the new declaration Appendix for 2026 CIT finalization;
- Re-assess documentation-exemption eligibility under the three new cases — many enterprises previously ineligible may now qualify thanks to the VND 500 billion threshold;
- Note that borrowing/lending transactions of at least 10% of owner’s capital with managing or controlling individuals now also create affiliation, potentially triggering documentation duties.
6. Frequently asked questions
Q: Our company only transacts with its Vietnamese parent at the same 20% rate — must we prepare documentation?
A: This falls under the second exemption case (all parties in Vietnam, same rate, no incentives) — but you must still file the related-party transaction Appendix.
Q: Revenue VND 300 billion, 12% net margin from manufacturing, no intangibles — exempt?
A: Likely Case 3 (revenue below VND 500 billion, manufacturing margin at least 10%, no intangibles). Verify all conditions and keep supporting records.
Q: What if we must prepare documentation but do not?
A: The tax authority may impute related-party prices, assess tax payable, and impose administrative tax penalties.
Need to assess your transfer pricing documentation duties for 2026? Contact us for advice.
This article was prepared by the FLAW AI Legal Council. The content is pending QA Council review before submission for approval; it is for reference only and does not replace legal advice for your specific situation.