What is a CbCR report? Who is required to prepare it?

In the era of global financial digitalization and the boom of multinational corporations (MNEs), international tax management in Vietnam is being tightened more than ever. The introduction of Decree 132/2020/ND-CP and Decree 20/2025/ND-CP Amendments and additions to Decree 132 mark a major shift for the Tax Authority, moving from traditional inspection methods to the application of advanced international standards. Among the obligations to declare related-party transactions, the preparation and submission of the CbCR (Country-by-Country Report) is considered one of the most complex and important legal procedures.

For Chief Financial Officers (CFOs), Chief Accountants, or corporate legal professionals, misunderstanding the nature of, late in submitting, or inconsistently reporting data on the Transfer Pricing Correspondence Report (CbCR) can lead to extremely serious legal consequences, even triggering transfer pricing audits. This article will provide a comprehensive update on the obligations to prepare and submit the CbCR Report in Vietnam.

What is a CbCR report?

The CbCR report provides a comprehensive, global overview of the distribution of income, revenue, assets, workforce, and corporate income tax (CIT) payments of a multinational corporation in each country or territory where it operates.

The purpose of international tax administration.

The CbCR report is a core part of the suite. related-party transaction pricing documentation Recommended by the Organization for Economic Cooperation and Development (OECD) under the BEPS Action 13 program to combat tax base erosion and profit shifting.

Instead of focusing on a single entity in Vietnam, the tax authorities can use the CbCR report to monitor the entire cash flow and profits of the global corporation. This completely eliminates the blurred lines between tax havens and countries with high tax rates.

Strategic significance in Vietnam's tax administration.

According to the instructions at Official Document 271/TCT-TTKT According to the General Department of Taxation's introduction of the new points of Decree 132/2020/ND-CP, Vietnam has specifically internalized the regulations on the management and use of this report. The ultimate goal of collecting data for the CbCR Report includes:

• Systematic transfer pricing risk assessment: This helps tax authorities analyze whether there is an unreasonable shift of profits from countries with high tax rates to territories with extremely low tax rates or equal to 0%.
• Optimizing audit resources: Reports act as a risk filter. The Tax Authority will use big data analytics algorithms to scan financial indicators, thereby detecting anomalies and creating a checklist of key areas for inspection instead of conducting widespread audits.
• Fulfilling international commitments: Facilitating the automatic exchange of information (AEOI) between the General Department of Taxation of Vietnam and tax authorities of partner countries through tax agreements and multilateral agreements between competent authorities (MCAAs).

Entities required to prepare and submit CbCR reports in Vietnam according to Decree 132

Determining whether your business is required to prepare and submit country-by-country profit reports requires a thorough review of the corporate structure and revenue thresholds. Article 18 of Decree 132/2020/ND-CP clearly defines this obligation based on the role of taxpayers in Vietnam.

In the case where the ultimate parent company in Vietnam submits the CbCR Report.

For taxpayers in Vietnam who are the ultimate parent company of a multinational corporation with cross-border related-party transactions, the reporting obligation will be triggered based on the following consolidated revenue thresholds:

• Mandatory revenue threshold: The group's consolidated global revenue for the tax period must reach VND 18 trillion or more.

If eligible, taxpayers in Vietnam are responsible for preparing the CbCR report in accordance with the prescribed form issued with Decree 132. 

Note: The VND 18 trillion threshold is a determining condition for the obligation to submit the CbCR report, calculated based on the consolidated revenue of the entire group in all countries, not just the revenue generated by the parent company in Vietnam.

To minimize unnecessary technical errors, businesses can seek assistance from specialized units. related party transaction documentation service To ensure absolute accuracy in accordance with regulations.

This applies to the case where a subsidiary in Vietnam has a supreme parent company abroad, as per the CbCR report.

For FDI enterprises with a parent company located abroad, as a general principle, if the parent company is obligated to prepare reports under the laws of the host country, they will submit them to the tax authorities of the host country. The Vietnamese Tax Authority will automatically collect these reports through the Automatic Exchange of Information (AEOI) mechanism.

However, taxpayers in Vietnam will be required to personally submit a copy of the CbCR report to the local tax authority if they fall into one of the following three scenarios:

• No automatic exchange agreement exists: The country where the ultimate parent company resides has an international tax agreement with Vietnam, but at the time of the reporting deadline, the two parties have not signed or have not reached a Competent Authority Agreement (MCAA) for the automatic exchange of information regarding this report.
• Suspension of data exchange mechanism: The country of the ultimate parent company that signed the MCAA with Vietnam is temporarily suspending the automatic data exchange mechanism or experiencing technical system issues that disrupt the automatic transmission of data to Vietnam.
• There is a written designation for submission: In cases where a multinational corporation has more than one taxpayer in Vietnam and the ultimate parent company abroad designates in writing a subsidiary in Vietnam to be responsible for submitting this report.

Important Note: In the case of designated submission, the designated entity must send a written notification of this designation to the Vietnamese tax authorities before or on the last day of the group's fiscal year. Failure to submit this notification may result in all other subsidiaries of the group in Vietnam being considered in violation of their tax compliance obligations.

Deadline for submitting and procedures for preparing the CbCR report in accordance with regulations.

One of the leading reasons why FDI businesses are subject to administrative penalties and listed as high-risk for tax purposes is negligence in monitoring legal deadlines and errors in currency conversion when filling out forms.

The deadline for submitting reports is according to the latest regulations.

The deadlines for submitting the CbCR report are consistently set, yet offer a degree of flexibility to allow multinational corporations to collect global data.

For example:  The South Korean household goods manufacturing conglomerate has a subsidiary in Vietnam. The fiscal year of the parent company in Seoul ends on December 31, 2025.

• The maximum deadline for the ultimate parent company to submit its report to the Korean Tax Agency is December 31, 2026.
• In cases where direct payment obligations arise in Vietnam, FDI enterprises in Vietnam must also complete and submit a copy of the CbCR Report to the Vietnamese Tax Authority no later than December 31, 2026.

Key content in the CbCR Report under Decree 132

Appendix IV requires businesses to declare information systematically, divided into three specific sections:

Part 1: Allocation of income, taxes, and business activities by tax country

Businesses must group financial data by country where the group has operating member entities. Mandatory criteria include:

• Revenue: Revenue from transactions with independent parties and revenue from transactions with related parties must be clearly separated.
• Profit: Profit before corporate income tax.
• Corporate Income Tax: The amount of tax actually paid (on a cash basis) and the amount of tax incurred during the fiscal year of the reporting period.
• Resource indicators: Registered capital, accumulated undistributed profits, number of full-time employees, and value of other tangible assets.

Part 2: List of all member entities of a multinational corporation by tax country of residence

Businesses need to list in detail the name of each member entity, tax identification number, country of incorporation (if different from the tax residence country), and accurately select the core business activity (e.g., Manufacturing, Research and Development, Retail, Internal administrative services, Internal financial management, etc.).

Part 3: Additional Information

This section is for detailed explanations of the data sources used to prepare the CbCR Report (e.g., taken from consolidated financial statements or separate financial statements of each subsidiary), the currency conversion methods applied, or any special notes that help the Tax authorities understand the nature of the input data.

See also: Instructions for preparing the CbCR report in related-party transactions.

Notes on using the CbCR Report in tax risk management.

To effectively manage transfer pricing risks, the accounting and finance departments of a business need to clearly understand the professional mindset of tax inspectors when they receive a company's international profit report.

Principles for the Tax Authority's Use of Information

As specifically stipulated in Official Letter No. 271/TCT-TTKT based on Decree 132, Vietnam commits to complying with OECD standards on information security and limiting the scope of report usage: It is only for risk management and trend analysis purposes and not for direct tax assessment.

This means that if the Tax Authority discovers that the profit margin of the subsidiary in Vietnam is unusually low while the subsidiary in Singapore records a supernormal profit margin, the Tax Authority is not allowed to use that difference to directly decide on tax collection or tax assessment for the business in Vietnam.

Instead, the Tax authorities will use this information for risk management. They will make decisions to conduct on-site inspections and audits at the Vietnamese business premises, requesting the submission of all relevant documents. National Profile of Related-Party Transactions (Local File) and conduct a detailed comparison and analysis of related-party transactions to demonstrate non-compliance with the market price principle (Arm's Length).

Business risks require cross-checking before submission.

To avoid being investigated by transfer pricing auditors, businesses need to proactively cross-check the following data:

• Absolute consistency of data: The total revenue from related parties declared in the CbCR Report in the Vietnam line must completely match and be consistent with the related-party transaction revenue declared in Appendices I, II, and III of the Transfer Pricing Documentation submitted in Vietnam.
• The correlation between profit and actual scale: The Tax Authority will assess the ratio between profit and the number of employees and tangible assets. If Vietnam has 90% of production workers and fixed assets but only 10% of total profit allocated to the entire Group, this is certainly an anomaly that will raise serious questions for the Tax Authority.
• Actual tax paid ratio: Compare the actual corporate income tax paid by the group in Vietnam with the tax payable. If a significant discrepancy arises without a satisfactory explanation in Part 3 of the Report, the business will be classified as high risk.

Regulations regarding related-party transactions are heavily reliant on international best practices, involve complex techniques, and require in-depth expertise. Proactive coordination with specialized units is essential. Transfer pricing advisory services In-depth analysis is the optimal solution to help businesses identify and perfectly control potential risks early on, before the tax authorities conduct an audit.

Frequently Asked Questions about the CbCR Report

To help businesses quickly resolve issues arising during the preparation process, below is a compilation of frequently asked questions sent to MAN – Master Accountant Network:

Conclude 

In summary, the CbCR report is not simply a standard administrative reporting form, but a global tax management tool. Carelessness in preparing cross-border earnings reports can lead businesses to face lengthy transfer pricing audits lasting for months, causing significant damage in terms of both costs and brand reputation.

Contact MAN – Master Accountant Network For free support and advice!

Contact information MAN – Master Accountant Network

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Content production by: Mr. Le Hoang Tuyen – Founder & CEO of MAN – Master Accountant Network, CPA Vietnam auditors with over 30 years of experience in accounting, auditing, and financial consulting.