Decree No. 255/2026/ND-CP dated June 30, 2026, regulates tax management for related-party transactions

On June 30, 2026, the Government issued Decree No. 255/2026/ND-CP regulating tax management for related-party transactions of enterprises with related-party relationships.

This Decree amends and supplements many important contents related to related-party transactions and enterprises with related-party transactions as follows:

1. The scope of regulation and the subjects to which it applies have been expanded and clarified

• Scope: This Decree specifies the principles of application, related parties, methods for determining transfer pricing, cost determination, rights and obligations of taxpayers, responsibility for reporting country-by-country profits, and responsibilities of state agencies.
• Applicable subjects: Including corporate income tax payers with related-party transactions, tax authorities, and other relevant state agencies, organizations, and individuals.

2. Stricter application principles

• Elimination of factors influenced by related-party relationships: Taxpayers must exclude factors that reduce tax liability due to related-party relationships in order to determine tax liability equivalent to independent transactions.
• Tax audit principle: Tax authorities manage and audit related-party transaction prices according to the principles stipulated in the Tax Administration Law.

3. Definitions of additional and detailed terms

• Many important terms such as “Related-party transactions”, “Tax agreements”, “Agreements of competent authorities”, “Ultimate parent company”, “Independent comparable entity”, “Material differences”, “Independent transaction value range”, “Country profile”, “Global profile” are defined in detail, helping to clarify the scope of application and interpretation of the regulations.

4. Detailed Regulations on Related Parties

• The Decree expands and clarifies the criteria for determining related parties, including cases related to capital contributions, guarantees, loans, appointment of board members, personnel control, finance, business operations, and family relationships.
• Exceptions are made for credit institutions and other special cases.

5. The process of analyzing, comparing, selecting independent comparable entities, and the methods for determining transfer pricing are standardized and detailed

• Principles of analysis and comparison: Emphasize the nature of the activity, the transaction determining tax obligations, and the practices of the parties involved.
• Selecting independent comparable entities: Clearly define the criteria, order of priority, and minimum number of comparable entities.
• Adjusting prices, profit margins, and profit allocation ratios: Provide specific guidance on how to adjust and the cases in which to apply standard independent transaction value ranges.

Methods for Determining Transfer Pricing:

• Comparison of Transfer Pricing with Independent Transaction Pricing (Independent Transaction Pricing Method): Applied to transactions with common market conditions or publicly disclosed prices.
• Comparison of Taxpayer Profit Margin with the Profit Margin of Independent Comparative Entities: Includes resale price, cost plus profit, and net profit methods. Clearly defines the cases for application of each method and the material influencing factors.
• Profit Allocation Method: Applied to specific transactions, group integrations, digital economy transactions, or when there is no basis for applying other methods.
• Databases Used: Clearly defines the types of databases used and their order of priority, including commercial databases, publicly available information on stock exchanges, commodity exchanges, and national databases.

6. Strict regulations on determining deductible and non-deductible expenses

• Expenses inconsistent with the nature of independent transactions: Not deductible.
• Inter-party service expenses: Clearly defined conditions for deduction and non-deductible expenses.
• Total deductible interest expense: Limited to 30% of total net operating profit, plus interest expense and depreciation expense, with provisions for carrying forward non-deductible interest expense to the next period.

7. Supplementing regulations on Country-by-Country Profit Reporting

• Clearly defining the obligation to prepare and submit Country-by-Country Profit Reporting for multinational corporations with consolidated global revenue reaching a certain threshold.
• Detailing the cases in which taxpayers in Vietnam are not required to submit, are required to submit, or are designated to submit the report on their behalf.

8. Regulations on Transfer Pricing Documentation and Taxpayer Responsibilities

• Decree detailing the content of the National Documentation, Global Documentation, and Country-by-Country Report.
• Taxpayers are obligated to prepare, maintain, and provide these documents upon request from the tax authorities.

9. Exemptions and Special Cases

• Exemption from declaration and preparation of Transfer Pricing Documentation: Clearly defines the cases eligible for exemption, including: transactions with related parties in Vietnam, total revenue/transactions below a certain threshold, having signed an Advance Pricing Agreement (APA), or achieving the required net profit margin for certain sectors.
• Regulations on APA: Taxpayers who have signed an APA must still declare and comply with regulations for transactions not covered by the APA.

10. Enhancing the role and responsibilities of tax authorities

• Tax authorities apply risk management in tax administration regarding transfer pricing.
• The right to assess taxes in cases where taxpayers violate tax laws or fail to comply with regulations on declaring and determining transfer pricing.
• Tax authorities are responsible for maintaining confidentiality and exchanging information with taxpayers and partner tax authorities.
• Tax authorities support taxpayers in voluntary compliance and provide information on industry profit margins.