How do I add an appendix to a related-party transaction record?

In the context of the Tax Authority increasingly tightening tax management for foreign-invested enterprises (FDI) and domestic corporations, even a small error in declaring Appendix I, II, III, or IV is unacceptable. Decree 132/2020/ND-CP This can also lead to businesses being subject to back taxes, disallowance of interest expense deductions, and even tax assessments. Therefore, if a business discovers that it has not submitted or prepared the related-party transaction reporting documents, it needs to urgently supplement the related-party transaction appendix to ensure compliance and avoid the risk of tax assessments. This article will provide a detailed analysis based on the legal regulations in effect in 2026.

Key legal basis for related-party transactions

To understand how to properly include related-party transaction appendices, accountants and business owners first need to be familiar with the core legal documents. Correctly citing the law not only gives businesses confidence in their explanations but also increases the persuasiveness of their tax filings.

• Tax Administration Law No. 38/2019/QH14This document outlines the framework for tax declaration obligations, taxpayer responsibilities, and the authority of tax authorities in combating transfer pricing.
• Decree 132/2020/ND-CP: This is the most important document detailing tax management for enterprises with related-party transactions. This decree establishes strict standards for price comparison and limits on interest expense deductions (it remains the highest-ranking effective document until 2026).
• Circular 80/2021/TT-BTCThis document provides guidance on the implementation of certain provisions of the Law on Tax Administration, including specific forms and procedures that businesses must comply with.

According to Article 18 of Decree 132/2020/ND-CP, taxpayers with related-party transactions are responsible for declaring information on related-party relationships and related-party transactions using the appendix forms issued with the Decree and submitting them together with the Corporate Income Tax Return.

Which entities are required to submit an addendum to their related-party transactions?

In reality, after the corporate income tax settlement period on March 31st, many businesses were surprised to find out upon reviewing their records that they had related-party transactions but had not fully declared the required appendices. This is a fairly common situation, especially among FDI enterprises, family businesses, businesses that borrow capital from their directors, or those with internal transactions within the same ecosystem.

In many cases, businesses only begin to look into supplementing related-party transactions after the tax return filing deadline to promptly correct errors and avoid being assessed as high-risk by the tax authorities or facing administrative penalties. The main reason stems from the fact that businesses have not correctly identified related-party relationships as stipulated in Article 5 of Decree 132/2020/ND-CP. 

Some typical cases include:

• One party participates directly or indirectly in at least 25% of the other party's equity contribution.
• Both sides have at least 25% equity capital contributed by a third party, either directly or indirectly.
• A business can guarantee or lend capital to another business in any form, provided that the loan amount is at least 25% of the owner's equity and accounts for over 50% of the total value of the borrowing business's medium and long-term debts. This is a very common practice in Vietnamese businesses when borrowing from banks under the guarantee of the business owner or directly from the director/manager.
• One business appoints members of the board of directors or takes control of another business.

If your business falls under one of the above categories and has transactions (buying and selling goods, lending, providing services, transferring intangible assets, etc.) during the tax period, you are required to declare the appendices accompanying the corporate income tax return.

What is the standard procedure for adding an appendix to related-party transactions?

This supplementary declaration or filing typically occurs in two contexts: initial filing along with the annual corporate income tax settlement, or filing a supplementary declaration upon discovering errors in previous periods. 

To learn how to professionally add a related-party transaction appendix, follow these four steps:

Step 1: Identify the list of related parties and the transactions involved.

Accountants need to review the entire list of shareholders, loans, and sales contracts with the parent company, subsidiaries, or companies within the same group. Incorrectly identifying related parties is a leading cause of tax penalties. Particular attention should be paid to the relationships between family members of the business's executives.

Step 2: Classify and select the appropriate appendix template.

Depending on the scale and nature of the transaction, businesses need to know how to supplement the related-party transaction appendix using the following four templates:

• Appendix I: Information on related-party relationships and related-party transactions (Required for most related-party businesses).
• Appendix II: List of information and documents required for the Local File.
• Appendix III: List of information and documents required for the Master File.
• Appendix IV: Declaration of information for the Country-Based Profit Report (CbCR) for corporations with consolidated global revenue of VND 18 trillion or more.

Step 3: Collect data and apply the price comparison method.

This is the most difficult step in the process of supplementing the related-party transaction appendix. The enterprise must demonstrate that the transaction value with the related party is at "market price". Common methods, as stipulated in Articles 13, 14, and 15 of Decree 132, include:

• The Comparable Prices of Independent Transactions (CUP) method.
• Resale Price method.
• Cost Plus method.
• The method of comparing net profit margins (NPRI).
• Profit Sharing Method (PSM).

Step 4: Complete the declaration directly on the HTKK software.

Currently, the electronic tax system has synchronized data. Access the latest version of the Tax Declaration Support software (HTKK), select "Corporate Income Tax" and then "Corporate Income Tax Final Settlement Declaration (03/TNDN)". Here, the system will allow you to select the corresponding Appendices I, II, III, and IV to fill in the information.

Details are provided in the appendix on related-party transactions.

The related-party transaction appendix is a core part of a related-party transaction. Specifically, each item in the appendix illustrates:

• Section I: Information on related parties (Including: Name, Tax code, Country, Form of related party relationship from point a to point l of Clause 2, Article 5 of Decree 132).
• Section II: Cases exempt from declaration and documentation for price determination. If your business is eligible for this exemption, this is a crucial step to optimize your tax liability.
• Section III: Summary of related-party transactions. Corporate accountants need to clearly separate revenue and expenses from transactions involving the purchase and sale of goods, provision of services, royalties, and especially interest expenses.
• Section IV: Business results after adjusting for market prices. This section is where businesses adjust their taxable income upwards or downwards based on price comparisons.

See details: Instructions for declaring related-party transactions on HTKK.

Note: Supplementing the related-party transaction appendix as soon as possible is crucial to avoid tax assessment risks and late payment penalties with an interest rate of 0.031 TP3T/day. Regarding pricing documentation, businesses should carefully store it at their premises and present it immediately upon inspection.

Certain special cases are exempt from the requirement to prepare a valuation report.

To avoid wasting resources, businesses need to clearly understand the exemption conditions when exploring how to supplement related-party transaction appendices. According to Article 19 of Decree 132, cases exempt from preparing a Price Determination Document include:

• Businesses with total revenue under VND 50 billion and total value of related-party transactions under VND 30 billion during the tax period.
• The company has signed an Advance Pricing Agreement (APA) and submits periodic APA reports.
• Businesses performing simple functions, generating no revenue, and generating no revenue below VND 200 billion/year, apply the profit margin on revenue (EBIT/Revenue) as prescribed, such as Distribution from 5% or more, Manufacturing from 10% or more, and Processing from 15% or more.

See details: No related-party transaction documentation is required.

Note: Even though businesses are exempt from creating the Local File and the Master File, they must still complete Appendix I.

Serious legal risks arise from not including an addendum to related-party transactions.

In 2026, with the support of AI and Big Data in the tax sector, detecting errors will become easier than ever. Risks businesses may face include:

• Tax assessment: This is the most serious risk. If a business fails to include related-party transactions in its tax return or provides incomplete declarations, the tax authorities have the right to assess the price, profit margin, or taxable income based on their tax database. This often results in significantly higher tax liabilities compared to self-assessment.
• Elimination of interest expense: According to Article 16 of Decree 132, if an enterprise has related parties but fails to submit Appendix I, all interest expense exceeding 30% EBITDA will be completely excluded from deductible expenses.
• Administrative penalties: According to Decree 125/2020/ND-CP, the act of late submission or incomplete submission of related-party transaction documents carries a very heavy fine with interest at a rate of 0.031 TP3T/day. Therefore, delays in supplementing the related-party transaction appendix will significantly increase the fine amount.
• High-risk profile: Businesses will be placed on a "blacklist" for targeted tax audits and inspections for many consecutive years, impacting their production and business operations.

If the accounting department lacks experience in preparing and explaining documents to the Tax authorities, proactively seeking advice is recommended. related party transaction advisory services We seek support and guidance from reputable and experienced professional organizations like MAN – Master Accountant Network.

Practical experience helps optimize interest costs and related-party transaction documentation.

During consultations, MAN – Master Accountant Network identified several common mistakes accountants make when attempting to add related-party transaction appendices on their own. Below are some key points to optimize your documentation:

Rules for controlling interest expense

The total interest expense incurred that is deductible when determining corporate income tax shall not exceed the total net profit from business operations during the period plus interest expense and depreciation expense. The formula for determining EBITDA is as follows:

The portion of interest expense that is not deductible (the amount exceeding the 30% limit) will be carried forward to the next tax period if the business has a surplus in EBITDA, but the carry-forward period must not exceed 5 consecutive years. To effectively manage the addition of related-party transactions, accountants need to create a table to track carried-forward interest expense to avoid missing out on tax benefits.

Ensure data consistency.

A common error is that the figures in Appendix I do not match the Financial Statements or the Corporate Income Tax Return Form 03/TNDN. 

For example: If a business declares loan transactions in Appendix I, then the corresponding loan amount must be shown on the Balance Sheet. This discrepancy is a crucial point that immediately draws the attention of the tax authorities.

Prepare data for benchmarking.

If your business is required to prepare related-party transaction documentation, proactively seek out independent businesses that are similar in size, market, and function. Understanding the pricing methodology will help you know how to include related-party transaction appendices to provide the most convincing explanation to the inspection team.

Frequently Asked Questions Regarding Adding an Appendix to Related Party Transactions

Conclude

Understanding and correctly implementing the supplementary appendix to related-party transactions is not just an administrative procedure, but a crucial part of a business's risk management and cost optimization strategy. A well-prepared dossier, adhering to the regulations in Decree 132/2020/ND-CP, will be a solid shield, enabling businesses to operate confidently and achieve sustainable development.

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

Contact information MAN – Master Accountant Network

• Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
• Mobile/Zalo: 0903 963 163 – 0903 428 622
• Email: man@man.net.vn

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