The exchange rate for the global consolidated revenue threshold is a minor technical detail, but it can determine whether a subsidiary in Vietnam is required to submit a Country-by-Country Report (CbCR), because the 750 million EUR threshold according to OECD standards is only meaningful when correctly converted to the reporting currency. Clause 6, Article 19 of Decree 255/2026/ND-CP Although specific regulations exist for determining this exchange rate, many chief accountants still confuse the central exchange rate, the cross-exchange rate, and the reference point. This article systematically reviews the legal basis, calculation methods, and practical scenarios to help businesses proactively prepare for reporting deadlines.
Why are global consolidated revenue threshold exchange rates a matter of concern for the chief accountants of multinational corporations?
The global consolidated revenue threshold exchange rate is the foreign exchange rate used to convert the global consolidated revenue of a multinational corporation, as prepared in consolidated financial statements in the currency of the ultimate parent company, into a common currency, for comparison with the threshold for submitting a Country-by-Country Report as required by each country or territory.
In other words, these are the financial figures before answering the crucial question:
“"Did the group exceed the global consolidated revenue threshold (according to the OECD standard of 750 million EUR) in the immediately preceding fiscal year?"”
A subsidiary company in Vietnam making an incorrect conclusion regarding the exchange rate for global consolidated revenue thresholds could lead to two contradictory but equally risky consequences:
- Failing to fulfill the obligation to submit the Country-by-Country Report on Profits when the threshold has actually been exceeded;
- Or submitting unnecessary information could lead to the disclosure of internal financial data beyond what is required.
With Decree 255/2026/ND-CP officially applied from the corporate income tax period of 2026, the method for determining the exchange rate for the global consolidated revenue threshold has been clearly legalized, instead of being left for businesses to speculate as before.
Legal basis for determining the exchange rate for global consolidated revenue thresholds.
All content related to the exchange rate for converting the global consolidated revenue threshold is found in Article 19 of Decree 255/2026/ND-CP, the provision stipulating the responsibilities of taxpayers related to the Country-by-Country Profit Reporting.
What does Clause 6 of Article 19 of Decree 255/2026/ND-CP stipulate?
This is the direct and sole basis for determining the global consolidated revenue threshold exchange rate:
The foreign exchange rate used to determine the consolidated revenue threshold is determined according to the central exchange rate or the average cross-exchange rate of December of the year preceding the reporting year, as published by the State Bank of Vietnam.
The three elements in this regulation constitute the entire method for determining the global consolidated revenue threshold exchange rate:
- Source of exchange ratesOnly exchange rates published by the State Bank of Vietnam may be used; commercial bank exchange rates or free market exchange rates are not permitted.
- Type of exchange rateThere are two options: the central exchange rate or the average cross exchange rate, depending on the currency pair being converted.
- Reference timeBased on December of the year immediately preceding the reporting year, not December of the reporting year itself or the annual average.
Why is the global consolidated revenue threshold needed to be converted into a common currency?
The threshold for submitting a Country-by-Country Report is established according to OECD practice, typically referencing €750 million in consolidated global revenue for the fiscal year immediately preceding the reporting year. Meanwhile, the consolidated financial statements of the ultimate parent company may be prepared in USD, JPY, GBP, or another local currency depending on the country of operation.
Without a unified global consolidated revenue threshold exchange rate rule, each enterprise could choose a time when the exchange rate is favorable to it to avoid exceeding the threshold, distorting the transparency objectives of the global CbCR mechanism. This is why Clause 6 of Article 19 of Decree 255/2026/ND-CP rigidly locks down the source of exchange rates, the type of exchange rate, and the reference time, leaving no room for enterprises to choose freely.
How to determine the actual global consolidated revenue threshold exchange rate.
Should we choose the central exchange rate or the cross exchange rate?
The choice between the two exchange rates depends on the currency used for the consolidated financial statements of the ultimate parent company:
- Central exchange rateThis applies when direct conversion between VND and USD is required, as this is the exchange rate published daily by the State Bank of Vietnam as the basis for credit institutions to determine transaction exchange rates.
- Average cross exchange rateThis applies when the reporting currency of the ultimate parent company is not USD (e.g., EUR, JPY, GBP, CNY). In this case, the conversion is done indirectly through the cross exchange rate between VND and other foreign currencies published by the State Bank of Vietnam.
Using the correct exchange rate may seem simple, but it's the most common mistake when a company has its parent company headquartered outside the USD-based system. Many accountants automatically use the central VND/USD exchange rate and manually convert it to a third currency, instead of referencing the correct cross-exchange rate published by the State Bank of Vietnam.
Reference period: December of the year immediately preceding the reporting year.
This is the second most confusing detail in determining the exchange rate for the global consolidated revenue threshold. The "reporting year" here refers to the fiscal year in which global consolidated revenue is matched against the threshold for submitting the Country-by-Country Report, i.e., the fiscal year immediately preceding the reporting year as stipulated in other clauses of Article 19. The exchange rate to be used is neither the annual average nor the rate at the time of reporting, but a fixed rate. December of the year immediately preceding the reporting year.
Setting a single point in time, instead of averaging or using the rate at the time of occurrence, completely eliminates the debate about "which day of the year to use the exchange rate," an issue that caused confusion during the period before specific regulations were in place.
For corporations that need to systematically review their entire CbCR compliance record, consultation is essential. related party transaction advisory services from specialized, experienced units such as MAN – Master Accountant Network Right from the stage of determining the exchange rate for the global consolidated revenue threshold will help avoid discrepancies that could persist across multiple consecutive reporting periods.
An example illustrating how to apply the global consolidated revenue threshold exchange rate.
Suppose the ultimate parent company of a multinational corporation headquartered in Japan prepares consolidated financial statements in JPY. The CbCR reporting year is 2027, corresponding to the immediately preceding fiscal year of 2026.
- Step 1 – Identify the reference timeframe: According to Clause 6 of Article 19, the exchange rate to be used is the rate published in December 2026, not the average exchange rate for 2026 or the exchange rate at the time of submitting the 2027 report.
- Step 2 – Determine the type of exchange rate: Because the reporting currency is JPY and not USD, the subsidiary in Vietnam uses the average cross-exchange rate VND/JPY published by the State Bank of Vietnam for December 2026, instead of converting it using the central VND/USD exchange rate and then deriving the JPY.
- Step 3 – Convert the 750 million EUR threshold (or equivalent amount as instructed) to JPY. Using the aforementioned cross-exchange rate, compare it with the group's consolidated global revenue for 2026 (calculated in JPY) to determine whether the threshold is exceeded.
If a subsidiary company mistakenly uses the average exchange rate for the whole year of 2026 instead of the exchange rate for December 2026, or uses the central exchange rate instead of the cross-calculated exchange rate, the threshold comparison results could be significantly inaccurate, leading to incorrect conclusions regarding the obligation to submit the Country-by-Country Report.
In which cases is a Country-by-Country Report required after adjusting for the global consolidated revenue threshold?
After determining the conversion rate for the global consolidated revenue threshold and concluding that the group exceeds the consolidated revenue threshold, the next question is: does the subsidiary in Vietnam have to directly submit the Country-by-Country Profit Report? According to point b, clause 2, Article 19 of Decree 255/2026/ND-CP, taxpayers are only required to submit this report in one of the following cases:
- The ultimate parent company is not obligated to prepare and submit a Country-by-Country Report of Profits in the country or territory where the ultimate parent company is a resident.
- The country or territory where the ultimate parent company is a resident has an international tax treaty or international agreement with Vietnam, but does not have an agreement from a competent authority in effect with Vietnam at the time the report is due.
- The country or territory where the ultimate parent company is a resident has an Agreement with the competent authorities of Vietnam, but there has been a failure to systematically exchange information, and this situation has been notified to the taxpayer in Vietnam.
Points to note: Even if the global consolidated revenue threshold conversion results show the group has exceeded the threshold, the subsidiary in Vietnam still Are not A Country-by-Country Report of Profits must be submitted if the ultimate parent company is not subject to reporting requirements in its country of residence because its global consolidated revenue, as reported in the group's consolidated financial statements, falls below the threshold required by that country, due to differences in revenue thresholds, currencies, or principles for determining revenue between countries.
The requirement to submit the Country-by-County Report under Clause b, Section 2, Article 19 shall only be fulfilled when Vietnam meets the conditions regarding information confidentiality, consistency, and proper use of information as stipulated in the regulations. Point h, Clause 2, Article 30 of the 2025 Law on Tax Administration; The tax authority is responsible for publicly disclosing the fulfillment of these conditions on the tax authority's website.
For corporations with more than one taxpayer in Vietnam, if the parent company designates a single entity as the lead entity, that entity is responsible for submitting the Notice of Entity to File the Country-by-Country Profit Reporting Report along with the designation document, and fulfilling its reporting obligations in accordance with the CbCR (Computer-Based Credentialing) automatic information exchange mechanism that Vietnam is a party to. Businesses can find more information on this mechanism in the article on... CbCR automatic information exchange mechanism To understand how data will be shared between tax authorities in different countries after the report is submitted.
4 common mistakes when determining the conversion rate for global consolidated revenue thresholds.
First, use the annual average exchange rate instead of the December rate. Paragraph 6 of Article 19 specifies the December date of the year immediately preceding the reporting year, not the 12-month average or the exchange rate at any point in the year.
Two, incorrect reference year. Some businesses mistakenly used the December exchange rate of their own reporting year instead of the immediately preceding year, leading to conclusions about the global consolidated revenue threshold being off by a fiscal year.
Third, using the wrong type of exchange rate for currencies other than USD. For the parent company that prepares reports in EUR, JPY, or other currencies, applying the central VND/USD exchange rate directly instead of the cross-average exchange rate published by the State Bank of Vietnam is against regulations.
Fourth, omit the step of verifying the exemption conditions at point b, clause 2, Article 19. Many businesses stop immediately after concluding that they have exceeded the global consolidated revenue threshold, forgetting to check whether the ultimate parent company actually has reporting obligations in its country of residence, leading to over- or under-submission of the Country-by-Country Report.
The review of all four points should be carried out simultaneously with the process. Create related party transaction records Each year, discrepancies in exchange rate conversions are often only revealed when cross-referencing with the global portfolio and the group's country-by-country earnings report.
Checklist for reviewing before submitting the Country-by-Country Report.
Here is a checklist for reviewing before submitting the Country-by-Country Report:
- Correctly identify the “reporting year” and the “year immediately preceding the reporting year” according to the designation or internal regulations.
- Use the exchange rate published in December of the year immediately preceding the reporting year, not the annual average exchange rate.
- Select the correct central exchange rate or cross-average exchange rate based on the reporting currency of the ultimate parent company.
- Compare the consolidated global revenue after conversion against the threshold for filing a Country-by-Country Report.
- Examine the exemption conditions under point b, clause 2, Article 19 before concluding on the reporting obligation.
- Keep a record of the designated contact person (if the corporation has multiple taxpayers in Vietnam) and the Notification of Reporting Entity.
- Prepare the Country-by-Country Profit Report in encrypted XML format and submit it through the Tax Management Information System within 12 months from the end of the fiscal year of the ultimate parent company.
Conclude
The exchange rate for the global consolidated revenue threshold, seemingly a minor technical detail in Decree 255/2026/ND-CP, is actually a crucial step before businesses can answer the larger question: whether the corporation is required to submit a Country-by-Country Profit Report in Vietnam.
Three things to remember:
- The exchange rate must be based on the rate announced by the State Bank of Vietnam in December of the year immediately preceding the reporting year;
- The type of exchange rate used, whether central or cross-calculated, depends on the reporting currency of the ultimate parent company.;
- Even if the threshold is exceeded after conversion, the reporting obligation still requires further verification against the conditions in point b, clause 2, Article 19.
Businesses wishing to learn more about other changes in this document can refer to the comprehensive article for further information. New points in Decree 255/2026/ND-CP To grasp the overall picture before delving into specific responsibilities.
If your company's CbCR filing is still facing issues in determining the exchange rate for global consolidated revenue thresholds or identifying the reporting entity, MAN – Master Accountant Network's team of related-party transaction experts is ready to review it with your company before the filing deadline.
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Responsible for production and professional content review by: Mr. Le Hoang Tuyen – Founder & CEO of MAN – Master Accountant Network. He is a CPA Vietnam auditor with over 30 years of in-depth experience in accounting, auditing, taxation, and corporate legal consulting.
Frequently Asked Questions about Global Consolidated Revenue Exchange Rates
Which document specifies the exchange rate for determining the global consolidated revenue threshold?
According to Clause 6, Article 19 of Decree 255/2026/ND-CP, the exchange rate for converting the consolidated revenue threshold is determined according to the central exchange rate or the average cross-exchange rate of December of the year immediately preceding the reporting year, as published by the State Bank of Vietnam.
Why are there two types of exchange rates to choose from?
The central exchange rate applies when directly converting between VND and USD; the average cross exchange rate applies when the ultimate parent company prepares consolidated financial statements in a currency other than USD, requiring indirect conversion through the cross exchange rate published by the State Bank of Vietnam.
How is the year immediately preceding the reporting year interpreted?
This is the fiscal year immediately preceding the year in which consolidated global revenue is matched against the threshold for filing a Country-by-Country Report. The reference exchange rate is taken in December of this year, not the reporting year.
If the consolidated global revenue threshold is exceeded after conversion, is it mandatory to submit a Country-by-Country Report?
Not necessarily. According to point b, clause 2, Article 19, the reporting obligation also depends on whether the ultimate parent company has a reporting obligation in its country of residence, as well as the status of the Agreement between the competent authorities of that country and Vietnam.
In what format should the country-by-country earnings report be submitted, and within what timeframe?
The report must be submitted in encrypted XML format via the Tax Management Information System no later than 12 months from the end of the fiscal year of the ultimate parent company of the reporting year.
If a corporation has multiple subsidiary companies in Vietnam, who is responsible for submitting the reports?
If the parent company designates a taxpayer in Vietnam as the designated entity, the designated entity shall submit the Notice of Entity to File the Country-by-Country Report of Profit and Loss along with the designation document and fulfill the reporting obligations on behalf of the entire group in Vietnam.