Related-Party Transactions in Vietnam: Definitions, Disclosure, and Common Traps
The short answer
Under Vietnam’s transfer pricing framework, two parties are generally treated as related if one directly or indirectly holds 25% or more of the other’s charter capital, if both are controlled by a common third party holding 25% or more, if one guarantees 25% or more of the other’s borrowings, if one has the right to appoint a majority of the other’s board, or if a single individual holds 25% or more in both entities. Transactions between a company and its permanent establishment, and between entities under common individual control, are also captured. As of 1 July 2026, these rules sit under Decree No. 255/2026/ND-CP, which replaced Decree 132/2020/ND-CP and Decree 20/2025/ND-CP.
What counts as a related-party transaction
Vietnamese law casts a wide net, covering:
Purchase, sale, and bartering of goods
Rental, leasing, and licensing arrangements
Provision of services, including management and technical support fees
Financial borrowing, lending, guarantees, and other financial instruments
Transfer or disposal of tangible and intangible assets
Cost-sharing or resource-sharing agreements between related entities
If a Vietnamese subsidiary buys inventory from its parent, pays a regional headquarters a management fee, licenses a trademark, or receives a shareholder loan, all of these are related-party transactions subject to arm’s-length pricing and disclosure requirements.
Disclosure and documentation obligations
Taxpayers with related-party transactions must annually:
Declare related-party relationships and transactions as part of the Corporate Income Tax finalization process, using the prescribed disclosure forms.
Prepare a Transfer Pricing Documentation package, generally following the three-tier OECD approach — local file, master file, and Country-by-Country Report for qualifying multinational groups — before the annual CIT filing deadline.
Maintain supporting benchmarking analysis demonstrating that pricing falls within an arm’s-length range, using comparables that must generally be sourced locally before regional data is used.
Some domestic-only transactions and lower-risk categories carry exemptions from full documentation, and the exemption thresholds were revised under Decree 255 — worth reconfirming for FY2026 rather than assuming last year’s exemption still applies.
Where FDI companies most often get exposed
Undocumented management fees. Charges from a regional or global headquarters without a clear benefit test or supporting agreement are one of the most commonly challenged items in Vietnamese transfer pricing audits.
Loans without market-consistent terms. Related-party loans priced below (or above) what an independent lender would charge, or without proper loan agreements, invite both transfer pricing and interest-deductibility challenges under the 30% EBITDA limitation.
Royalty and IP licensing arrangements that lack a defensible valuation basis for the underlying intangible.
Assuming a “safe harbor” applies without re-checking updated exemption thresholds under Decree 255.
How W&A Consulting helps
We identify related-party relationships across a client’s group structure, prepare compliant disclosure forms and documentation packages, and benchmark intercompany pricing to withstand audit scrutiny from the General Department of Taxation — which has significantly increased its focus on foreign-invested enterprises in recent years.
Not certain your intercompany arrangements would hold up under audit? Speak with W&A Consulting about a related-party transaction health check.
FAQ
What ownership threshold makes two companies “related” in Vietnam?
25% or more direct or indirect ownership, or common control by a third party holding 25% or more, among other tests.
Do all related-party transactions need full transfer pricing documentation?
No — certain lower-risk and domestic-only transactions carry exemptions, though thresholds were updated under Decree 255/2026/ND-CP.
What happens if related-party disclosures are missed?
Non-disclosure or inadequate documentation significantly increases the risk of tax authority-imposed pricing adjustments, penalties, and interest during an audit.
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