In the context of tax authorities tightening control over transfer pricing and applying digital data to risk analysis, the question of what documents constitute a related-party transaction file is central to many FDI enterprises, multinational corporations, and even domestic businesses with related-party transactions. Understanding the correct structure of the file, from mandatory declaration appendices to the transfer pricing documentation package including the Local File, Master File, and Country-by-Country Report of Profit and Loss (CbCR), not only helps businesses comply with regulations but also ensures compliance. Decree 132/2020/ND-CP Furthermore, it minimizes the risk of being assessed for taxes, having taxes collected back, and being penalized during tax audits in 2026.
Related-party transactions and corporate obligations
Before delving into the details of what constitutes a related-party transaction, businesses need to clearly define their legal position. According to Articles 5 and 6 of Decree 132, a related-party relationship arises when one party directly or indirectly participates in the management, control, capital contribution, or investment in the other party (the minimum capital ownership threshold is usually 25%).
In 2026, tax authorities will not only look at the numbers on the books but also conduct in-depth economic analysis through big data systems. Businesses will be obligated to prove that transactions with related parties (such as borrowing, buying and selling goods, providing services, transferring intangible assets) were conducted according to the arm's length principle. Without adequate supporting documentation, businesses face the risk of significant tax assessments and late payment penalties, directly impacting cash flow and long-term financial plans.
What documents are required for related-party transactions according to current regulations?
The structure of the transfer pricing documentation set under Vietnamese law includes two main groups of components:
- The declaration forms are submitted along with the tax return.
- The three-tiered file system is maintained at the company.
The declaration forms are submitted together with the Corporate Income Tax Return.
These are the required documents that must be submitted online through the electronic tax system along with the annual Corporate Income Tax (CIT) return (usually the last day of the third month from the end of the fiscal year).
- Appendix I (Form No. 01): This is considered the most important part of the declaration process. This appendix requires businesses to list in detail all related parties, specify each type of transaction and its corresponding value, and identify the pricing method applied and the price/profit margin achieved.
- Appendix II (Form No. 02): List of information and documents required in the National File (Local File).
- Appendix III (Form No. 03): List of information and documents required in the Global File.
- Appendix IV (Form No. 04): Country-by-Country Report (CbCR).
Reference: Instructions for declaring related-party transactions on HTKK.
The set of documents for determining transfer pricing (kept at the company)
When an audit is requested, businesses must submit a comprehensive set of documents comprising three layers of detailed information. So, what exactly does this core content of the related-party transaction documentation include?
Local File
Local Files focuses on business entities in Vietnam. This is the thickest document and requires the highest level of technical expertise.
- Functional, Asset, and Risk Analysis (FAR): Businesses must clarify who is responsible for the design, production, distribution, marketing, and warehousing stages. What tangible assets (factories, machinery) and, especially, what intangible assets (brand, technological know-how) are used? And what risks does the business face? (Market risk, inventory risk, bad debt risk, exchange rate risk, etc.). In principle, the higher the risk a party bears, the greater the expected profit.
- Selection of pricing method: Explain the reasons for choosing one of the five official methods according to Decree 132.
- Benchmarking: Businesses must find at least 3-5 independent businesses with similar functions for comparison. By 2026, using international databases such as Orbis and Moody's will be almost mandatory to ensure objectivity.
Master File
This document provides a comprehensive overview of the multinational corporation. It includes the organizational chart, global value chain (where the greatest value is created), key intangible assets (IPs), and the corporation's internal financial policies. This document helps tax authorities understand the Vietnamese company's position within the overall profit landscape.
Country-by-Country Reporting (CbCR)
It is only mandatory if the corporation has consolidated total revenue of VND 18,000 billion or more during the tax period. This report helps countries automatically exchange information to monitor whether the corporation is "tax-sheltering" in countries with low tax rates.
Relying solely on internal personnel is sometimes insufficient to meet the stringent technical requirements of international benchmarking data. Many businesses have opted to utilize external services. related party transaction documentation service Professionalism is essential to ensure consistency between customs data, electronic invoices, and international financial reports, thereby minimizing the risk of tax assessments.
Methods for determining pricing in related-party transactions.
To fully understand what a related-party transaction record includes, it's essential to master the five methods of determining pricing. Choosing the wrong method is a leading cause of tax assessment issues.
- The Comparative Independent Price (CUP) method: Directly compares the prices of products between related parties with market prices. Often used for mass-produced goods, minerals, or loan interest rates.
- Resale Price Method: Suitable for businesses that purely perform distribution functions, buying and reselling without changing the product's characteristics.
- Cost Plus Method: Applicable to businesses that manufacture, process orders, or provide services to affiliated parties.
- Net Profit Margin Comparison Method (NPMR): This is the most common method in Vietnam. It compares the profit margin (e.g., EBIT/Revenue) of a business with that of independent competitors in the market.
- Profit Split Method: Used for complex, highly integrated transactions where all parties contribute unique intangible assets.
To ensure that the related-party transaction documentation is highly convincing and avoids rejection by inspectors, businesses should seek advice. related party transaction advisory services To receive support and determine the appropriate methods based on the scale and industry in which the business operates.
Cases exempt from filing related-party transaction records.
Businesses may be exempt if they fall into the following categories:
- Small-scale group: Revenue under VND 50 billion and related-party transaction value under VND 30 billion.
- Safe Harbor Profit Margin Group: Revenue below VND 200 billion, performing simple functions along with a minimum EBIT/Revenue profit margin (5% for distribution, 10% for manufacturing, and 15% for processing).
- Purely domestic transactions: Both parties pay the same tax rate and do not receive any preferential treatment.
See details: No related-party transaction documentation is required.
The record retention period and legal risks that businesses need to pay special attention to.
Understanding what related-party transaction records include is not enough if businesses do not have a firm grasp of the deadlines for filing, retention periods, and potential legal risks that may arise during tax audits. In reality, many businesses are not subject to back taxes due to incorrect pricing methods, but rather because of late filing, incomplete documentation, or inconsistent data.
Deadline for filing related-party transaction documents.
According to Decree 132/2020/ND-CP, businesses must complete the preparation of the Transfer Pricing Documentation before submitting their annual Corporate Income Tax (CIT) return.
For example: For businesses with a fiscal year ending on December 31, 2025, the deadline for completing and submitting the necessary documents is... Related Party Transaction Appendix that is March 31, 2026.
This means that businesses shouldn't wait until the tax authorities conduct an inspection to start preparing their documents, but should proactively complete them beforehand.
Deadline for submitting documents when requested by the tax authorities.
When the tax authorities issue a decision to conduct an inspection or audit, or request an explanation, the business must submit all necessary documents within the following timeframe:
- 15 working days from the date of receipt of the request.
If there is a reasonable and justifiable reason, the business may request an extension:
- Up to an additional 15 business days.
However, in practice, requests for extensions are not always approved. If a business fails to submit the documents on time, the tax authorities have the right to:
- Determine your own transfer pricing.
- Determining the taxable profit threshold
- Tax collection and administrative penalties
This is one of the biggest risks when businesses neglect record keeping.
Retention period for related-party transaction records
Businesses must retain all records, documents, and data related to related-party transactions in accordance with the laws on accounting and tax management. The minimum retention period is 10 years, including:
- Related Party Transaction Appendix
- Local File
- Master File
- CbCR (if required)
- Internal corporate contracts
- Loan application
- Service cost allocation record
- Payment voucher
- Emails, meeting minutes, and work reports prove the authenticity of the transaction.
Note: In 2026, tax authorities will place particular emphasis on intercompany service transactions, so businesses need to maintain very strict records of service delivery.
Common legal risks
Businesses will be subject to tax assessment if:
- No record created.
- Incomplete documentation
- The records do not demonstrate the principle of independent transaction.
- The figures in Appendix I and the financial statements do not match.
The tax authorities have the right to independently select comparable businesses and determine the appropriate profit margin themselves. The fixed margin will be unfavorable to the business, leading to:
- Increase taxable income
- Increase the amount of corporate income tax payable.
- A large amount of back taxes has been collected.
The expenses most likely to be disallowed include:
- Interest expense exceeds the limit 30% EBITDA
- Internal service fees do not demonstrate the benefits received.
- Royalty fees and technology transfer fees lack a basis for valuation.
- The cost allocation by the corporation lacks a reasonable basis.
The disallowance of expenses not only increases corporate income tax but can also affect contractor tax, VAT, and other related obligations.
Depending on the severity of the violation, businesses may be penalized for administrative tax violations, including late filing, incorrect tax declarations resulting in underpayment of taxes, or tax evasion if there are signs of transfer pricing.
The penalty can range from 20% of the amount of tax to be collected to 1-3 times the amount of tax evaded, not including late payment interest at 0.03%/day. This is a very significant expense that directly impacts the company's cash flow.
Conclude
Understanding what constitutes a related-party transaction record not only helps businesses comply with tax regulations but also serves as a crucial shield against increasingly stringent transfer pricing audits in 2026.
From fully completing the appendices as stipulated in Decree 132/2020/ND-CP, building a three-layer documentation system including Local File, Master File, and CbCR, to selecting an appropriate pricing method and controlling interest expenses, all require accuracy, consistency, and a long-term strategic approach.
Early preparation, regular reviews, and the support of specialized consulting firms like MAN – Master Accountant Network will help businesses minimize the risk of unnecessary tax assessments, back taxes, and penalties.
Contact MAN – Master Accountant Network For free support and advice!.
Contact information MAN – Master Accountant Network
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Content is moderated by: Mr. Le Hoang Tuyen – Founder & CEO of Man, CPA Vietnam Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.