Transfer Pricing in Vietnam

Decree 132/2020/ND-CP and Decree 20/2025/ND-CP were both repealed with effect from July 1, 2026, and replaced by a single consolidated instrument: Decree 255/2026/NĐ-CP, issued June 30, 2026, and applying from the 2026 corporate income tax (CIT) period.

Contributing Advisor

Luy Doan

Manager, Tax

The new rules govern transactions are happening now, but the first filings under them will not fall due until FY2026 CIT finalization, roughly Q1 2027 for calendar-year taxpayers. That gap is the planning window. Companies that use it to re-test their related-party position, benchmarking, and intercompany documentation will file from a defensible position. Companies that wait until the filing deadline will reverse engineering a defence for transactions they can no longer restructure.

What changed under Decree 255, and what didn't?

The most important editorial point is that Decree 255 is not a rewrite of the arm's-length principle. It is an administrative consolidation with a handful of substantive changes that alter who is caught and how positions are defended.

Two of these deserve more attention than they usually get: the benchmarking hierarchy, and the tax authority's new power to publish sector, region, and taxpayer-group profit indicators. Together, they narrow the space for a company to argue its way to an unusual margin. If your Vietnamese entity's return sits below a published sector benchmark, you are now arguing against a number that the authority has already put in writing.

Are you a related party under the new rules, and would you know if you'd just become one?

This is where the most avoidable exposure sits. Decree 255 expands the circumstances in which an enterprise is treated as having a related-party relationship, including where, during a tax period, there are transfers or receipts of capital contributions representing at least 25 percent of the owner's contributed capital, or borrowing and lending arrangements (including asset lending) meeting the prescribed criteria. Financing-based related-party tests carried over from Decree 20 remain, with carve-outs for certain credit institution arrangements.

The practical consequence: a company can acquire related-party status through a single transaction it did not think of as a tax event. Typical triggers include:

• A shareholder loan or intercompany credit line drawn down to fund working capital or capex
• A parent-company guarantees supporting local bank borrowing
• A mid-year capital restructuring or partial equity transfer within the group, see our guide to capital transfer taxation under Decree 320
• Asset lending or free-of-charge asset use between group entities

None of these routinely reaches the tax team until year-end. By then, the transaction is documented on whatever terms the treasury function chose.

Which compliance option is right for your Vietnam entity in FY2026?

Foreign companies realistically choose between four approaches. They are not mutually exclusive, but they carry different costs, control, and defence profiles.

When does the documentation exemption help you?

The threshold increases to VND 500 billion, combined with a removal of the simple-function test, brings a meaningful population of mid-sized foreign-invested enterprises into the exemption range. But an exemption is a trade, not a gift. Relying on it means declaring a margin at or above the statutory minimum of, 5 percent, 10 percent, or 15 percent, depending on function, regardless of whether the entity's actual commercial performance supports it. For a subsidiary in a genuine loss-making year, the exemption may be more expensive than the documentation it replaces.

What changed for country-by-country reporting, and who must notify?

Vietnam has aligned its CbCR trigger with the OECD standard: EUR 750 million in global consolidated group revenue, tested on the preceding financial year, replacing the previous VND 18 trillion figure.

Local filing in Vietnam is required only in specified circumstances, broadly, where the ultimate parent is not required to file in its own jurisdiction, or no qualifying exchange mechanism is in place.

The step most often missed is the notification. Where the CbC report is filed abroad by an ultimate or surrogate parent entity, the Vietnamese entity must notify the tax authority of the filing entity using a new Form 01/TB-BCLN. The notification is generally made once, when the obligation first arises, with updates required within 90 days of any change. Reports themselves are filed electronically in XML format, generally within 12 months of the parent's financial year-end.

For regional controllers, this is a coordination problem more than a technical one: the obligation sits in Vietnam, but the information sits at head office.

What triggers a transfer pricing audit in Vietnam?

Vietnamese tax authorities have moved toward risk-based selection supported by inter-agency data sharing:

• Persistent losses or thin margins alongside significant payments to a foreign parent
• Management fees, royalties, and service charges without demonstrable benefit to the Vietnamese entity
• Intercompany financing, interest rates, guarantee fees, and thin capitalisation patterns
• Margins below published sector indicators for the entity's industry and region
• Mismatch between contract and conduct, agreements describing functions, the local team does not actually perform

Where an adjustment is made, the authority is not obliged to accept a taxpayer's position anywhere inside the arm's-length range; adjustments are made to the median. That asymmetry is why benchmarking quality matters more than benchmarking existence.

Which mistakes will cost foreign companies the most?

From advisory practice across Vietnamese FIEs, the same errors recur:

• Documentation prepared after the CIT return, not before. Vietnamese rules require documentation to be in place at the time of filing, not produced on request months later.
• Intercompany agreements that describe an idealised business. Auditors test substance. If the agreement says the parent provides technical support, someone should be able to name who, when, and with what deliverable.
• Benchmarking carried over from another jurisdiction. Regional comparable sets rarely survive scrutiny under the new data hierarchy.
• Ignoring the financing tests. A shareholder loan can create related-party status and simultaneously trigger the 30 percent EBITDA interest cap.
• Treating the exemption as permanent. Revenue growth, a new royalty stream, or an IP charge can remove eligibility mid-year.
• Assuming the group's CbCR filing covers Vietnam. It does not cover the local notification.

A further, underrated risk is procedural. Vietnam's 2025 Law on Tax Administration sits above Decree 255 and defines prohibited practices and penalty exposure; transfer pricing failures are enforced through that framework, not in isolation.

Is an Advance Pricing Agreement worth pursuing?

Decree 122/2025/ND-CP gave the Ministry of Finance and the Tax Department direct authority to negotiate and sign APAs, removing the previous requirement to route approval through the Prime Minister's office, a change intended to shorten a historically slow process. Unilateral, bilateral, and multilateral APAs are available, generally for terms up to three years.

Two caveats matter commercially. First, Decree 122/2025 is explicitly transitional and sunsets on March 1, 2027, with a fuller framework expected alongside the new tax administration architecture. Second, no advisor can credibly promise a processing timeline in the current environment. An APA is worth scoping where related-party flows are large, stable, and repeated annually, not as a fix for a single contested year.

Where does local advisory support change the outcome?

Not everywhere. Routine documentation for a small distributor is a commodity exercise. Advisory input changes outcomes in four specific situations:

• Scope determination, establishing whether recent financing or capital movements created a related-party relationship, before the position is fixed in a filing
• Benchmarking defence, building comparable sets that satisfy the new data hierarchy, and can be justified against published sector indicators
• Restructuring intercompany terms, adjusting service, royalty, and financing arrangements while the tax year is still open
• Audit and dispute response, where an examination is already underway, and the record has to be defended as it stands

What should you do before FY2026 CIT finalization?

A practical sequence for the next two quarters:

• Re-test related-party status for FY2026, including every capital movement, loan, guarantee, and asset lending arrangement in the period.
• Confirm exemption eligibility against the VND 500 billion threshold and the relevant minimum margin, and model whether relying on it is cheaper than documenting.
• Refresh benchmarking using sources that rank appropriately under the new hierarchy.
• Reconcile agreements with conduct, update intercompany contracts to describe what actually happens.
• Check the interest position against the 30 percent EBITDA cap, including any carried-forward disallowed interest.
• Confirm CbCR notification responsibility with the head office and diarise Form 01/TB-BCLN.
• Watch for implementing guidance. No detailed circular under Decree 255 has been confirmed at the time of writing; early positions may need revisiting.

Decree 255 does not sit alone. It arrived alongside a broader package, see our overview of the four new tax decrees shaping 2026 compliance ,and companies reviewing transfer pricing should review CIT, VAT, and tax administration obligations in the same exercise rather than in sequence.

Managing tax in Vietnam is critical for FDI companies to stay compliant with local regulations, GST requirements, and global standards such as IFRS, navigate complex filings, and apply correct tax treatments. A well-structured tax process helps to avoid penalties and stay 100% compliant.

Luy Doan

Assistant Manager, Tax

Talk to an expert at luy.doan@dezshira.com

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