Transactions between members of a multinational group — sales of goods, services, royalties, loans and cost allocations — are a constant focus of Vietnam's tax authorities. This guide summarises the rules a foreign-invested enterprise needs to apply to its related-party transactions and the documents it must be able to produce.
Legal basis and current rules
The core regulation is now Decree No. 255/2026/ND-CP of 30 June 2026 on tax administration for enterprises with related-party transactions, in force from 1 July 2026 and applicable from the 2026 corporate income tax year. It replaces Decree No. 132/2020/ND-CP and Decree No. 20/2025/ND-CP, which remain relevant only for earlier tax years. It is issued under the Law on Tax Administration 2019 and the corporate income tax legislation — now the Law on Corporate Income Tax No. 67/2025/QH15, effective 1 October 2025 and applicable from the 2025 tax year. Parties are related where, among other things, one directly or indirectly holds at least 25% of the other's equity, both are under common control, or there are specified financing, management or contractual dependencies. Since Decree 20/2025 (a rule carried over into Decree 255/2026), a direct loan from a bank or credit institution that does not participate in the management, control or capital of the borrower no longer makes the two parties related merely because of the loan — which takes many ordinary bank borrowers outside the interest cap discussed below. Related-party transactions must be priced in accordance with the arm's length principle — on the same terms as comparable transactions between independent parties — and the tax authority may adjust taxable income where they are not.
Pricing methods and the arm's length range
The decree recognises the comparable uncontrolled price method, resale price method, cost plus method, comparable profits / transactional net margin method and profit split method. The taxpayer selects the most appropriate method based on a functional and risk analysis and benchmarks its results against an arm's length range built from independent comparables. Where the result falls outside the range, the tax authority generally adjusts to the median of the range.
Documentation and filing
An enterprise with related-party transactions must disclose them in the prescribed form filed with its annual corporate income tax finalisation return. In addition, it must prepare transfer pricing documentation — a Local File and a Master File — before the CIT finalisation deadline, and, where the ultimate parent's consolidated global revenue is EUR 750 million or more (the OECD-aligned threshold adopted by Decree 255/2026), a Country-by-Country Report. When the tax authority requests it, the documentation must be produced within 30 working days of the written request, extendable once by up to 15 working days for good reason, so it should be ready, not prepared on demand.
The decree provides exemptions from preparing documentation (but not from disclosure) for, among others, enterprises with low revenue and low related-party transaction values, enterprises with an APA that file annual reports, and enterprises with revenue below VND 500 billion (raised by Decree 255/2026 from VND 200 billion), no income or expenses from exploiting intangible assets, and a net operating margin of at least 5% for distribution, 10% for manufacturing or 15% for toll-manufacturing. Check eligibility each year.
The interest deduction cap
Total net interest expense deductible for corporate income tax purposes is capped at 30% of EBITDA. Interest exceeding the cap may be carried forward for up to five consecutive years. Groups financing Vietnamese subsidiaries with intra-group loans should model the cap before deciding between debt and equity funding.
Advance pricing agreements
For significant or recurring transactions, an enterprise may apply for an advance pricing agreement (APA) — unilateral, bilateral or multilateral — under the Law on Tax Administration and its implementing regulations. An APA provides certainty on the pricing method for several years, at the cost of a lengthy application and negotiation process.
Common legal risks
Typical audit findings include recurring losses at a Vietnamese entity that performs routine functions, management fees and royalties without evidence of the benefit received, poorly chosen comparables, and documentation that is incomplete or inconsistent with the disclosure form. Adjustments lead to additional tax, late payment interest and administrative penalties, so the financial exposure can be substantial.
Practical advice
Review the group's intercompany agreements to make sure they reflect the actual functions and risks of the Vietnamese entity, update benchmarking regularly, and keep evidence of the services and benefits received for every intra-group charge. Involve tax and legal advisers when setting up new intra-group flows rather than at the audit stage.
Quick Q&A
When are two companies related parties in Vietnam?
Among other tests in Decree 255/2026 (which replaced Decree 132/2020 from 1 July 2026), where one directly or indirectly holds at least 25% of the other's equity, where both are under common control, or where specified financing, management or contractual dependencies exist.
Do all enterprises need a Local File and Master File?
No. All enterprises with related-party transactions must file the disclosure form, but the decree exempts certain enterprises from preparing documentation — for example those with revenue below VND 500 billion that meet the minimum margins of 5%, 10% or 15%.
How much interest is deductible?
Total net interest expense is deductible up to 30% of EBITDA; the excess may be carried forward for up to five years.
Can transfer pricing be agreed with the tax authority in advance?
Yes, through an advance pricing agreement (APA) under the Law on Tax Administration, which gives certainty on pricing methodology for a fixed number of years.
Note: This article summarises rules in force at the time of publication and is for general reference only; it is not a legal opinion on any specific matter. Legislation may be amended — please check the latest text or consult a lawyer before acting.