When Are Enterprises Exempt from Transfer Pricing Declaration and Documentation Related-Party Transaction Documentation

Is your enterprise really required to prepare the burdensome Transfer Pricing Documentation (three-tiered documentation) for this tax finalization period? Under Article 20 of Decree No. 255/2026/ND-CP, the Government has clearly divided the levels of exemption from declaration and preparation of Transfer Pricing Documentation (TPD) to reduce administrative procedures for small enterprises, domestic enterprises, or those achieving safe profit margins. Nevertheless, these exemptions do not exist independently and are always accompanied by strict verification conditions.

Together with experts from CDLAF & CFT Solutions, let us break down the latest exemption conditions and highlight the “common mistakes” to help enterprises proactively manage risks before tax inspections and audits.

1. General Declaration and Documentation Obligations

Within the broader framework of Decree No. 255/2026/ND-CP, the provisions on exemption from declaration and preparation of transfer pricing documentation (TPD) under Article 20 are designed as safe harbors to reduce the administrative compliance burden on enterprises. However, these exemptions do not exist independently, but are closely linked to general declaration and documentation obligations and other expense limitation rules.

To understand the value of these exemption provisions, it is first necessary to consider the strict general obligations that all enterprises with related-party transactions (RPTs) must comply with under Article 18:

• Annual declaration obligation: The enterprise must fully declare information on related-party relationships and RPTs in Appendix I and submit it together with the Corporate Income Tax (CIT) finalization return.
• Three-tier documentation obligation: The enterprise must proactively prepare and retain Transfer Pricing Documentation, including: the Local File (Appendix II), the Master File (Appendix III), and the Country-by-Country Report (Appendix IV) before the annual CIT finalization deadline.
• Submission deadline: Upon request by the tax authority, the enterprise must provide these documents within 30 working days (which may be extended only once for no more than 15 working days if there is a legitimate reason).

2. Cases Eligible for Partial Declaration Exemption and Documentation Exemption (Article 20)

Decree No. 255/2026/ND-CP divides the exemptions into two specific levels for control, including:

Partial Exemption from Transfer Pricing Declaration & Full Exemption from Documentation (Clause 1, Article 20)

This is the highest level of exemption for enterprises with RPTs but with no risk of offshore transfer pricing or profit shifting between tax-incentivized areas.

• Applicable conditions: The enterprise only has transactions with related parties that are subject to CIT in Vietnam, apply the same CIT rate, and none of the parties enjoy CIT incentives during the tax period.
• Scope of exemption: The enterprise is exempt from declaring transfer pricing information in Section III (Transfer Pricing Information) and Section IV (Post-Transfer Pricing Business Results) of Appendix I; and is also fully exempt from preparing Transfer Pricing Documentation (including both the Local File and the Master File).
• Relationship with general obligations: The enterprise must still declare information on related-party relationships in Section I and the basis for exemption in Section II of Appendix I attached to the tax finalization dossier. In other words, the obligation to demonstrate that it qualifies for the exemption remains mandatory.

Full Appendix I Declaration but Exemption from Transfer Pricing Documentation (Clause 2, Article 20)

The enterprise must still provide detailed declarations of transactions in Appendix I when submitting its tax finalization, but is relieved from the burdensome obligation to prepare Transfer Pricing Documentation (three-tiered documentation) if it falls into one of the following cases:

• Exemption based on size (Point a): The enterprise has RPTs, but its total revenue for the tax period is below VND 50 billion and the total value of all RPTs arising during the tax period is below VND 30 billion.
• APA-based exemption (Point b): The taxpayer has entered into an Advance Pricing Agreement (APA) and has fully submitted the required annual report.
• Exemption based on actual business performance (Point c – Profit Margin Safe Harbor): This is the most significant relief, replacing the former “simple function” rule. The enterprise is exempt from documentation if it simultaneously satisfies three conditions: No revenue or expenses arise from the exploitation or use of intangible assets; Revenue is below VND 500 billion; The net profit margin before interest and CIT expenses (EBIT) on net revenue reaches at least the applicable threshold for each business sector: Distribution: 5% or higher; Manufacturing: 10% or higher; Processing: 15% or higher.

3. Key Points for Enterprises to Note

A critical point that enterprises can easily misunderstand under the overall framework of the Decree is that being exempt from preparing transfer pricing documentation does not mean being exempt from other RPT-related regulations.

Clause 3, Article 20 clearly provides that taxpayers, even if they qualify for partial declaration exemption or exemption from preparing Transfer Pricing Documentation (under Clauses 1 and 2), must still determine the total deductible interest expense (subject to the 30% EBITDA cap) in accordance with Clause 3, Article 16.

Therefore, even if your enterprise is a small enterprise with revenue below VND 50 billion, or falls within the domestic group with the same tax rate and qualifies for documentation exemption, the accounting department must still calculate and adjust interest expenses exceeding the cap and declare this ratio in Appendix I.

In other words, enterprises must correctly understand and properly apply the exemption provisions under Article 20 of Decree No. 255/2026/ND-CP and always remember that: Being exempt from documentation does not mean being completely relieved from RPT obligations, particularly the control of the 30% EBITDA interest expense cap.

About the Author & Ecosystem: The article is legally supported by CDLAF and by the expertise of CFT Solutions – a company specializing in Finance – Tax – Accounting. We provide comprehensive management solutions that help enterprises control risks and optimize resources.

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