In the context of the Tax Authority's increased application of artificial intelligence (AI) and big data analytics in risk management, transfer pricing has become a "hot topic" in every audit. Transfer pricing only requires the emergence of related-party relationships and related-party transactions as stipulated in the regulations. Decree 132/2020/ND-CP, Businesses may be required to declare and submit related-party transaction appendices and face significant risks if they make mistakes. This article will help businesses understand when to prepare related-party transaction appendices, exemption cases, required forms, and the significant risks that could lead to the disallowance of interest expense deductions, tax assessments, and administrative penalties if they do not comply with the regulations.
Why do businesses need to be especially cautious?
By 2026, Vietnam's tax sector had completed the interconnected database system between the General Department of Taxation, the State Bank of Vietnam, and business registration agencies. This allows authorities to identify hidden relationships or unusual transactions between related businesses with just a few query commands.
In reality, many businesses still mistakenly believe that only multinational corporations or FDI enterprises are subject to regulations. This is an extremely dangerous misconception. As long as a business has economic relationships as stipulated in Decree 132/2020/ND-CP, understanding when to prepare an appendix to related-party transactions is a mandatory requirement to ensure compliance and avoid unnecessary financial risks.
When exactly is it necessary to create an addendum to a related-party transaction?
To answer the question of when to create an addendum to related-party transactions, businesses need to perform a two-step verification process based on the Related-Party Relationship and Related-Party Transactions.
Step 1: Identify the Relationship (Article 5, Decree 132)
This is a prerequisite. A business is considered to be affiliated with another business or individual if it falls under one of the following common cases:
- Direct or indirect equity contribution: One party directly or indirectly holds at least 25% of the other party's equity contribution.
- Borrowing and Lending (Most Common Case): One business lends to another or guarantees a loan in any form, provided that the loan amount is at least 25% of the owner's equity of the borrowing business and accounts for more than 50% of the total value of the borrowing business's medium and long-term debts.
- Management and control: A business may appoint members of its board of directors who have actual control over its operations, or two businesses may be jointly managed by individuals with family ties (spouse, parents, children, etc.).
See details: Forms of related-party transactions.
Step 2: Actual related-party transactions occur during the period.
After identifying an affiliated party, the business needs to review whether the following transactions occurred with the affiliated party during the fiscal year:
- Buying, selling, exchanging, renting, and leasing goods and tangible assets.
- Providing and receiving services (management fees, consulting fees, warehousing fees, personnel fees, etc.).
- Lending, borrowing, financial support (including loans with 0% interest rate or no interest charged).
- Transfer and lease of intangible assets (trademarks, copyrights, technical know-how).
Note: Businesses must understand when to create an addendum to related-party transactions as soon as at least one of the aforementioned transactions occurs with a related party.
Details of the types of appendices that must be prepared: Content and Forms
Once the timing for preparing the related-party transaction appendix has been determined, the enterprise must prepare a set of documents to be attached to the Corporate Income Tax Return, including the following four forms:
Appendix I (Form No. 01): Information on related party relationships and related party transactions
This is the most important and mandatory appendix for all participants. It contains:
- List of affiliated parties.
- The specific values of buy and sell transactions.
- Adjustments to the transaction value according to the valuation method (if any).
- Identify the cases that are exempt from preparing a Price Determination Report.
Appendix II (Form No. 02): List of documents for the National File (Local File)
Businesses must declare a list of information regarding their business operations, development strategies, and comparative analyses to demonstrate the objectivity of the transaction price.
Appendix III (Form No. 03): List of documents for the Global File (Master File)
Provide general information about the corporation (if it is a member of a multinational corporation), organizational chart, intangible assets, and global profit distribution policies.
Appendix IV (Form No. 04): Country-by-Country Report (CbCR)
This applies specifically to multinational corporations with consolidated global revenue of VND 18 trillion or more. Understanding when to prepare the related-party transaction appendix (Form No. 04) requires accountants to have access to data from the ultimate parent company abroad.
See details: Instructions for declaring related-party transactions on HTKK.
Exemptions and common misconceptions to avoid.
During the MAN – Master Accountant Network process Transfer pricing consultancy, We have observed that many businesses are penalized due to misunderstandings regarding when they are required to prepare an addendum to related-party transactions and when they are exempt. There are two levels of exemption that businesses need to clearly distinguish:
You are exempt from preparing a Price Determination Document, but you must still submit Appendix I.
Businesses are exempt from preparing the National File (Appendix II) and the Global File (Appendix III) if:
- Total revenue during the tax period is less than VND 50 billion AND the total value of related-party transactions is less than VND 30 billion.
- Businesses performing simple functions, with revenue under VND 200 billion and achieving a net profit margin (EBIT/Revenue) in the following areas: Distribution (from 5%), Manufacturing (from 10%), and Processing (from 15%).
Reference: No need to file related-party transaction records.
The declaration in Appendix I is completely waived.
Appendix I, issued with Decree 130/2020/ND-CP, is used for initial asset declarations, supplementary declarations, or declarations for personnel purposes. Exemption from declaration only applies to individuals who are not required to declare assets according to the law.
Warning: If a business is enjoying tax incentives (tax exemption or reduction based on location or industry), and is therefore required to find out when to prepare and submit an addendum to related-party transactions on time, this exemption is not applicable.
A major risk arises from not correctly identifying when to prepare an addendum to a related-party transaction.
The consequences of omitting or misdeclaring related-party transaction appendices in 2026 are extremely serious:
Interest expense is excluded (30% EBITDA restriction)
According to Clause 3, Article 16 of Decree 132, the total interest expense (after deducting interest on deposits and loans) deductible when calculating corporate income tax must not exceed 30% EBITDA.
- If businesses fail to identify when they need to prepare an addendum to related-party transactions for proper declaration, the entire interest expense may be rejected by the tax authorities, leading to a sharp increase in corporate income tax payable.
Note: This non-deductible portion of interest expense can be carried forward to the next tax period, but not for more than 5 consecutive years.
Loss of the right to determine prices independently and being subject to fixed taxes.
When a business violates regulations regarding tax declaration, the Tax authorities have the right to:
- Use industry databases to determine trading prices or profit margins.
- Eliminate unreasonable costs incurred between related parties. Once imposed, businesses have almost no opportunity to explain or appeal because the initial documentation violated compliance requirements regarding when to create an addendum to related-party transactions.
Administrative penalties and damage to the company's reputation.
The penalties for late submission or missing appendices can amount to tens of millions of VND per form. More importantly, businesses will be classified as "High Risk" on the General Department of Taxation's management system, leading to more frequent inspections in subsequent years.
When is it necessary to create an addendum to a related-party transaction? Checklist for accountants.
To avoid ever having to worry about when to create an addendum to a related-party transaction, the accounting department should follow this procedure:
- Submission deadline: The appendix must be submitted at the same time as the Corporate Income Tax Return. The deadline is usually the last day of the third month from the end of the fiscal year.
- Declaration tool: Use the latest version of the HTKK (Tax Declaration Support) software. Here, the indicators in Appendix I will automatically link to some indicators on the Corporate Income Tax Final Settlement Declaration.
- Record keeping: Even if a business is exempt from preparing a Price Determination File, evidence proving the exemption must still be carefully stored for presentation during inspections.
- Maintain thorough and careful records of transfer pricing (if the business is not exempt). These records must be immediately presented and explained upon inspection or audit.
Frequently Asked Questions
Yes. If the Director holds more than 25% capital as an affiliated party, even a loan transaction with an interest rate of 0% constitutes an affiliated transaction. It must still be fully and detailedly disclosed because the interest rate does not adhere to the equity principle.
Yes. The 50 billion VND threshold is only a condition for exemption from preparing the Price Determination Document, not for exempting the preparation of Appendix I. Businesses still have to declare Appendix I as usual.
Businesses need to submit the supplementary documents immediately. However, submitting them after the deadline is still considered an administrative violation and may increase the risk of on-site inspection. Submitting the supplementary documents as soon as possible will limit unnecessary late payment penalties.My company borrowed money from the Director at an interest rate of 0.%. Do we need to know when we need to create an addendum to the related-party transaction?
With revenue of only 10 billion VND, is it necessary to consider when to create an addendum to related-party transactions?
Is it a problem if I submit my corporate income tax return but forget to attach the appendix?
Conclusion and recommendations
Determining precisely when to create an addendum to related-party transactions is the first and most crucial step in modern tax administration. In 2026, proactiveness and transparency will be the best shield for businesses.
Advice from experts at MAN – Master Accountant Network:
- It is advisable to review business relationships quarterly instead of waiting until the end of the year.
- Calculate your 30% EBITDA threshold periodically to proactively manage your cash flow for tax payments.
- If there are complex transactions (transfer of intangible assets, corporate management fees), it is advisable to proactively seek advice. related party transaction advisory services Obtain standardized pricing documentation from professional and experienced consulting firms.
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 & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.