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Under Decree 132/2020/ND-CP (in Vietnamese) (as amended and supplemented), enterprises with related-party transactions must declare information and prepare and retain transfer pricing documentation. However, the Decree also provides certain cases of exemption from declaration or exemption from documentation to reduce the compliance burden. Misapplying these exemptions is a common error found during tax audits.

1. Exemption from both declaration and documentation

A taxpayer whose related-party transactions are only with parties that are CIT payers in Vietnam, applying the same tax rate as the taxpayer, where neither party enjoys CIT incentives during the tax period, is exempt from declaring and determining related-party transaction prices.

Note: From the 2025 tax period, the CIT Law No. 67/2025/QH15 introduces 15% and 17% rates for small enterprises. Enterprises should re-examine the "same tax rate" condition among domestic related parties, as the parties may now apply different rates. In addition, the 15% and 17% rates do not apply to subsidiaries or related companies where the related enterprise does not qualify for these rates.

2. Exemption from documentation (Form 01 must still be declared)

• Small scale: total revenue in the tax period below VND 50 billion and total value of all related-party transactions in the period below VND 30 billion.
• Advance pricing agreement (APA): an APA has been signed and annual reports are submitted in accordance with APA regulations.
• Simple functions: the enterprise performs simple business functions, has no revenue or expenses from exploiting or using intangible assets, has revenue below VND 200 billion and applies a minimum ratio of net operating profit before interest and tax to revenue of 5% for distribution, 10% for manufacturing and 15% for processing.

Enterprises exempt from documentation must still declare related-party transaction information (Form 01) with the CIT finalisation dossier and comply with the arm's length principle. They should also keep records proving that they meet the exemption conditions.

3. Common mistakes

• Assuming that domestic transactions require "no action" while one party enjoys CIT incentives.
• Counting only sales revenue and omitting financial income and other income when testing the VND 50 billion threshold.
• Omitting loans, guarantees and cost-sharing transactions when testing the VND 30 billion threshold.
• Applying the "simple functions" exemption while paying royalties or brand fees.
• Forgetting the interest expense cap – this rule applies regardless of the documentation exemption.

4. How ATAX can help

ATAX reviews related-party relationships, assesses whether the enterprise qualifies for an exemption, and prepares Form 01 and transfer pricing documentation when needed. See also: What are related-party transactions? (in Vietnamese)

Contact ATAX for an initial free consultation and a fee proposal for transfer pricing documentation: https://atax.vn.