Ho Chi Minh City. 13 August 2026
Related-party transactions remain one of the areas most closely scrutinized by Vietnam’s tax authorities during tax audits. Between 2020 and 2025, the tax authorities audited more than 5,000 enterprises engaged in related-party transactions, resulting in additional tax assessments, tax recoveries, and penalties totaling more than VND 12,000 billion.
The existence of related-party transactions does not, in itself, indicate transfer pricing or any violation of tax laws. However, from a tax administration perspective, such transactions may give rise to tax risks, particularly where:
- Management fees, intra-group interest expenses, or costs allocated by a parent company result in consistently low profits in Vietnam;
- An enterprise reports losses for several consecutive years while continuing to expand its operations and increase capital;
- An enterprise reports profits during a tax incentive period but experiences declining profits or incurs losses after the incentive period expires;
- Revenue fluctuations are not commensurate with changes in input costs;
- The enterprise’s profit margin is lower than that of comparable enterprises operating in the same industry; or
- The enterprise engages in related-party transactions with entities located in jurisdictions with low corporate income tax (“CIT”) rates or no CIT.
Key Changes Under Decree No. 255/2026/ND-CP
On 30 June 2026, the Government issued Decree No. 255/2026/ND-CP (“Decree 255”), replacing Decree No. 132/2020/ND-CP and Decree No. 20/2025/ND-CP. Decree 255 took effect on 1 July 2026 and applies from the 2026 CIT tax period onwards.
Key changes introduced under Decree 255 include:
- Expanding the scope of related-party relationships to cover certain borrowing and lending arrangements involving controlling individuals and certain related family members, with a view to ensuring that related-party determinations more accurately reflect the economic substance of transactions;
- Expanding the circumstances in which enterprises may be exempt from preparing transfer pricing documentation while remaining subject to related-party transaction declaration requirements;
- Recognizing the National Database as an official source for the declaration, determination, and administration of related-party transaction prices, and establishing a priority order for the use of publicly available databases, commercial databases, and tax authority databases; and
- Revising the Country-by-Country Reporting (“CbCR”) threshold to align with OECD recommendations, requiring reporting by Ultimate Parent Entities with consolidated global revenue of EUR 750 million or more in the preceding fiscal year.
Decree 255 represents a significant step toward aligning Vietnam’s related-party transaction framework with the Law on Tax Administration and international best practices. The new regulations are intended to enhance transparency, improve the efficiency of tax administration, and reduce compliance costs while remaining consistent with OECD standards.
Key Takeaways for Enterprises
Enterprises engaged in related-party transactions should proactively assess their transfer pricing risks, ensure complete and accurate disclosure of relevant information, and maintain robust supporting documentation to demonstrate the commercial substance of transactions, particularly those involving royalties, management fees, consultancy fees, and costs allocated by parent companies.
To comply with the new framework, enterprises should promptly review their transfer pricing policies and documentation processes, apply the prescribed hierarchy of databases when conduct transfer pricing analyses, and assess whether any CbCR obligations may apply.
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If your business is reviewing its related-party transactions or assessing potential tax risks, our team would be pleased to discuss further:
📧 info@indochinecounsel.com
☎️ (+84) 28 3823 9640
