International businesses operating in Vietnam should pay close attention to one of the country’s most important recent tax developments.
On 1 July 2026, the Government issued Decree No. 255/2026/ND-CP on Tax Management of Related Party Transactions (”Decree 255”), which applies from the 2026 Corporate Income Tax (CIT) year.
The new Decree significantly strengthens Vietnam’s transfer pricing regime by expanding the definition of related-party relationships, enhancing documentation requirements and bringing Vietnam even closer to international OECD and BEPS standards.
For multinational enterprises (“MNEs”), foreign-invested companies and their advisers, this is the right time to review existing transfer pricing policies and ensure that all related-party transactions are properly documented.
What is Transfer Pricing?
Before looking at the new rules, it is important to understand what transfer pricing actually means.
Transfer pricing refers to the prices charged for transactions between companies that belong to the same corporate group.
For example:
- A German parent company sells machinery to its Vietnamese subsidiary.
- A Singapore regional headquarters charges management fees to its Vietnamese affiliate.
- A parent company licenses software or trademarks to another company within the group.
- One group company grants a loan to another group company.
Because these companies are related, they are generally free to decide what prices they charge each other.
However, these prices directly affect where profits are earned and where taxes are paid. For this reason, tax authorities around the world closely examine transfer pricing arrangements.
The international standard is the Arm’s Length Principle, which simply means:
Related companies must deal with each other under the same commercial terms that independent companies would have agreed in comparable circumstances.
What Are Related Party Transactions?
Another important concept is the Related Party Transaction (“RPT”).
A related party transaction is any commercial transaction between businesses or persons that have a special relationship.
Typical related parties include:
- parent companies;
- subsidiaries;
- sister companies;
- companies under common ownership;
- joint venture partners;
- significant shareholders; and
- other enterprises that satisfy the legal criteria under Vietnamese law.
Related party transactions are perfectly legitimate and form part of the normal operation of multinational groups.
The key requirement is that these transactions must reflect genuine commercial conditions and be supported by appropriate documentation.
What Has Changed Under Decree No. 255/2026/ND-CP?
Decree 255 introduces several important changes that businesses should understand.
- Broader Definition of Related Parties
The new Decree expands the circumstances in which enterprises may be regarded as related parties.
An enterprise may now establish a related-party relationship where, during a tax period, there are transactions involving:
- transfers or receipts of capital contributions representing at least 25% of the owner’s contributed capital; or
- borrowing, lending, borrowing of assets or lending of assets that satisfy the criteria prescribed under the Decree.
As a result, more transactions may now fall within Vietnam’s transfer pricing rules than under the previous framework.
- Greater Focus on Intra-group Financing
One of the most significant practical changes concerns financing transactions.
The Vietnamese tax authorities are expected to pay much closer attention to:
- intra-group loans;
- shareholder loans;
- guarantees;
- financing arrangements; and
- other financial support provided between related companies.
Businesses should therefore ensure that interest rates, repayment terms, commercial rationale and economic substance are fully documented and supported by reliable arm’s length evidence.
- Longer Tax Examinations
Under Decree 255, transfer pricing tax examinations may now be extended to up to 40 days.
This gives tax authorities additional time to review documentation and analyse complex transfer pricing structures.
Companies should therefore ensure that all documentation is complete and readily available before any tax inspection begins.
- Country-by-Country Reporting
Vietnam has adopted the internationally recognised OECD BEPS threshold of EUR 750 million consolidated group revenue for Country-by-Country (“CbC”) reporting.
Groups exceeding this threshold must ensure that all notification, filing and reporting obligations are properly coordinated.
- Enhanced Documentation Requirements
The new Decree reinforces taxpayers’ responsibility to prepare and maintain comprehensive transfer pricing documentation.
This includes:
- disclosure of related-party relationships;
- declarations of related-party transactions;
- the Local File;
- the Master File; and
- the Country-by-Country Report, where applicable.
Proper documentation is often the strongest defence during a tax audit.
What Does This Mean for Foreign Investors?
Foreign-invested companies and multinational groups should not view Decree 255 as merely another compliance exercise.
Instead, it should serve as an opportunity to review existing transfer pricing arrangements and identify potential risks before they become tax disputes.
In particular, companies should consider:
- reviewing all intra-group financing arrangements;
- updating transfer pricing policies;
- ensuring that intercompany agreements reflect actual business practices;
- reviewing Local Files and Master Files;
- confirming compliance with Country-by-Country reporting obligations;
- updating benchmarking studies; and
- ensuring that comparable companies selected for pricing analyses remain appropriate under the revised rules.
Businesses relying on external comparables should also be prepared to explain why those comparables are the most reliable under the new hierarchy introduced by the Decree.
Final Thoughts
Decree No. 255/2026/ND-CP represents another important milestone in Vietnam’s continuing efforts to modernise its tax system and align with international standards.
As Vietnam continues to attract increasing levels of foreign direct investment, transfer pricing compliance will remain a key area of focus for the tax authorities.
Companies that review their transfer pricing policies early, maintain robust documentation and ensure that all related-party transactions reflect genuine commercial conditions will be significantly better positioned during future tax audits and inspections.
Proactive compliance today is likely to save substantial time, cost and uncertainty tomorrow.
For further information on Decree No. 255/2026/ND-CP, transfer pricing, related-party transactions or Vietnamese tax law generally, please do not hesitate to contact the author Dr. Oliver Massmann under [email protected]. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.