EU Adds Vietnam to its List of Non-Cooperative Jurisdictions: Tax and Compliance Implications

On February 17, 2026, during a meeting of the Economic and Financial Affairs Council of the European Union (ECOFIN), the finance ministers adopted updates to the EU list of non-cooperative jurisdictions for tax purposes. The revision forms part of the EU’s regular biannual review of non-EU jurisdictions against agreed criteria on tax transparency, fair taxation, and the implementation of international anti-base erosion and profit shifting (BEPS) minimum standards.

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As part of this update, Vietnam was added to Annex I of the list, which identifies jurisdictions classified as non-cooperative in tax matters. The decision follows a technical assessment under the OECD framework concerning exchange of information standards. Several other jurisdictions were also removed or reclassified, reflecting the structured and ongoing nature of the EU’s screening process.

While the term “EU blacklist” is often used in public commentary, Annex I should be understood primarily as a compliance classification within the EU’s tax governance framework. It does not alter Vietnam’s domestic tax regime or investment policies.

Nevertheless, for companies with EU-linked structures or cross-border flows, the development warrants a measured review of documentation and Member State-specific tax considerations. In this article, we examine the background to the EU decision, clarify what the Annex I listing does and does not imply for Vietnam-based businesses, and outline practical considerations for companies with EU exposure.

At a glance: Vietnam’s inclusion on the EU Annex I list

What happened?
On February 17, 2026, the EU added Vietnam to Annex I of its list of non-cooperative jurisdictions following an OECD peer review on exchange of information standards.

Does this change Vietnam’s tax laws?
No. Vietnam’s corporate income tax regime, withholding tax framework, and investment policies remain unchanged.

Where could impact arise?
Potential implications depend on how individual EU Member States apply domestic defensive measures, particularly in relation to cross-border payments and documentation requirements.

Who should review their structures?
EU-headquartered groups with Vietnamese subsidiaries, Vietnamese companies with EU investors or financing, and businesses with significant EU-Vietnam payment flows.

What is the practical takeaway?
For most companies, the development signals enhanced compliance review rather than structural tax disruption.

Understanding the EU listing framework

The EU list of non-cooperative jurisdictions, first introduced in 2017, is part of the EU’s broader effort to promote international tax good governance standards. Jurisdictions are screened against three principal criteria:

• Tax transparency;
• Fair taxation; and
• Implementation of OECD BEPS minimum standards.

Accordingly:

• Annex I includes jurisdictions that, at the time of review, are considered not fully compliant with one or more of these criteria or that have not delivered on agreed commitments; while
• Annex II includes jurisdictions that have committed to reforms and are subject to enhanced monitoring.

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The list is revised twice per year, reflecting ongoing dialogue and technical engagement between the EU and partner jurisdictions. Movement between Annex I and Annex II is therefore possible, and removal may occur once compliance with relevant standards is demonstrated.

Vietnam had previously been included in Annex II and was removed in October 2025 after fulfilling commitments related to country-by-country reporting implementation. Its addition to Annex I in February 2026 reflects developments under the OECD Global Forum peer review process concerning EOIR standards.

This context is important: the classification reflects a technical compliance assessment rather than a broader reassessment of Vietnam’s tax policy framework.

Why was Vietnam added to Annex I?

Vietnam’s addition follows an OECD peer review concluding that certain exchange of information on request (EOIR) standards were not fully met at the time of assessment. EOIR standards relate to the ability of jurisdictions to provide tax information upon request to treaty partners in accordance with international transparency norms.

Vietnam’s inclusion reflects findings under this transparency framework. It does not relate to corporate income tax rates, investment incentives, or domestic tax enforcement policies.

Given that the EU list is updated biannually, jurisdictions may be reassessed once technical standards are addressed. The framework is therefore dynamic and review-based, which is relevant when assessing medium-term implications.

Does the EU listing change Vietnam’s tax environment?

From a domestic perspective, the answer is no.

The listing does not:

• Alter Vietnam’s corporate income tax regime;
• Modify withholding tax rules;
• Invalidate double taxation agreements;
• Restrict EU investment into Vietnam; or
• Introduce new Vietnamese reporting obligations.

Vietnam’s domestic tax framework, including its implementation of global minimum tax rules aligned with OECD Pillar Two standards, remains unchanged.

The practical implications instead arise from how individual EU Member States apply their own “defensive measures” toward jurisdictions listed in Annex I.

How the EU Annex I listing works in practice

The EU list itself does not impose harmonized penalties across the European Union. Rather, it functions as a reference framework that EU Member States may incorporate into domestic legislation.

Member State-level defensive measures

Depending on national implementation, defensive measures may include:

• Limitations on deductibility of payments to listed jurisdictions;
• Withholding tax adjustments;
• Enhanced controlled foreign company (CFC) scrutiny;
• Additional disclosure or reporting requirements; and
• Restrictions under domestic anti-avoidance rules.

The extent and timing of these measures vary significantly across Member States. Some countries align directly with the EU list; others maintain separate national lists with different application timelines.

As a result, the impact for a Vietnam-related structure will depend on the specific EU jurisdictions involved and the nature of cross-border flows.

For many operating businesses, the primary consequence may be increased documentation expectations and compliance review rather than structural tax disruption.

Implications for EU transparency and reporting frameworks

The EU list also interacts with certain transparency regimes that may affect multinational groups.

Public country-by-country reporting

Under Directive (EU) 2021/2101 (Public CbC Reporting Directive), in-scope multinational groups must publicly disclose income, profits, and tax information on a jurisdiction-by-jurisdiction basis for:

• Each EU Member State;
• Each jurisdiction listed in Annex I; and
• Jurisdictions listed in Annex II for two consecutive years.

Vietnam’s inclusion in Annex I may therefore require separate disclosure of financial and tax data for Vietnam in public CbC reports prepared by affected groups.

This does not create new Vietnamese tax obligations but may affect disclosure granularity and public reporting considerations.

DAC6 mandatory disclosure

Under Directive (EU) 2018/822 (DAC6), certain cross-border arrangements involving deductible payments to related parties resident in Annex I jurisdictions may trigger reporting obligations under Hallmark C1(b)(ii), irrespective of whether a tax benefit is the main purpose.

Additionally, arrangements involving circumvention of financial account information exchange standards may fall within Hallmark D1.

These provisions affect EU intermediaries and taxpayers and do not introduce new Vietnamese compliance requirements. However, companies engaging in cross-border transactions should monitor reporting triggers carefully.

Which businesses should review their EU-Vietnam structures?

Companies with significant EU–Vietnam cross-border transactions should assess their exposure in light of Vietnam’s Annex I classification.

While the listing does not alter Vietnam’s domestic tax framework or impose automatic EU-wide sanctions, it may influence how certain EU Member States apply domestic defensive measures and transparency rules. As such, businesses with intercompany payments, financing arrangements, or EU-linked reporting obligations may benefit from reviewing their structures and documentation to ensure alignment with applicable Member State requirements.

EU-headquartered groups with Vietnamese subsidiaries may consider reviewing:

• Intercompany service arrangements;
• Interest payments and intra-group financing;
• Royalty and intellectual property licensing structures;
• Transfer pricing documentation; and
• Functional and substance analyses.

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Importantly, this review is about managing compliance risk under Member State domestic rules rather than addressing any new Vietnamese tax law changes. Member States have the discretion to apply defensive measures (such as restrictions on deductions or specific reporting requirements) to payments involving jurisdictions listed on Annex I, even though the EU list itself does not impose automatic sanctions.

Vietnam-based companies with EU investors or financing may wish to assess:

• Documentation supporting tax residency status;
• Cross-border payment flows that could be relevant for reporting under EU mandatory disclosure rules (such as DAC6, where payments to entities in a listed jurisdiction may trigger reportable hallmarks); and
• Contractual provisions such as tax gross-up or indemnity clauses that could affect tax outcomes in Member State jurisdictions.

Financial institutions and payment intermediaries operating across EU corridors may implement enhanced compliance procedures, including:

• Updated beneficial ownership verification;
• Clarification of transaction purpose; and
• Expanded compliance documentation requests.

These practices reflect broader risk-based compliance expectations in relation to EU tax transparency and reporting frameworks where Annex I listings are referenced (for example, in public Country-by-Country Reporting disclosures and DAC6 reporting triggers).

Practical steps for businesses with EU exposure

Companies with EU linkages may consider taking the following measured steps:

1. Map EU jurisdictional touchpoints:

• Identify all EU Member States involved in group structures;
• Categorize payment types (interest, royalties, services, dividends); and
• Review contractual clauses linked to tax representations.

2. Conduct a targeted Member State review:

• Confirm whether defensive measures apply in relevant EU jurisdictions;
• Assess deductibility or withholding implications; and
• Evaluate additional reporting obligations.

3. Strengthen documentation and substance

• Update transfer pricing files;
• Maintain beneficial ownership evidence;
• Prepare concise business purpose memoranda; and
• Ensure functional and risk analyses are current.

In many cases, preparation and documentation clarity can significantly mitigate compliance friction.

What happens next?

The EU list becomes effective following publication in the Official Journal of the European Union. Updates occur biannually.

Vietnam’s pathway to removal from Annex I is linked to progress in addressing the EOIR standards identified in the OECD review. As with other jurisdictions previously listed and subsequently removed, technical alignment may lead to reassessment in future update cycles.

The EU’s screening framework is designed as an ongoing monitoring mechanism rather than a permanent classification.

Conclusion: A compliance development rather than a structural disruption

For most businesses operating in Vietnam, the Annex I listing does not represent a fundamental change in the country’s investment environment. Vietnam’s corporate tax regime, investment framework, and implementation of international tax standards remain intact.

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The primary implications arise at the EU Member State level and are likely to center on enhanced documentation, disclosure, and compliance review for EU-connected structures.

The practical impact will vary depending on jurisdiction and structure. For many companies, the effect may be limited to increased transparency requirements rather than substantive tax cost changes.

Businesses with EU exposure are therefore advised to conduct a focused review, monitor developments in upcoming EU update cycles, and ensure that cross-border documentation and substance positions remain robust.

Vietnam continues to operate within a stable domestic tax framework. The Annex I inclusion should be understood within the broader context of international tax transparency monitoring rather than as a shift in the country’s investment fundamentals.

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

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