Exemption from creating Related Party Transaction Documents: Detailed Guide

The exemption from filing related-party transaction documents is a crucial mechanism that significantly reduces compliance costs and the pressure of preparing transfer pricing documentation for businesses in 2026. However, not all businesses with related-party transactions are eligible for this "green light." Incorrectly determining revenue thresholds, transaction values, profit margins, or omitting intangible assets can lead to the rejection of the exemption, tax arrears, and penalties amounting to billions of dong. This article will fully analyze the four cases eligible for exemption from filing related-party transaction documents under the latest regulations, clarify the differences between exemption from declaration and exemption from filing, and guide businesses in self-assessing conditions, identifying risks, and updating notable changes from Decree 20/2025/ND-CP.

Legal basis and core principles for exemption from related-party transaction documentation.

This article providing guidance on exemption from reporting requirements for related-party transactions is based on the most up-to-date legal regulations as of 2026:

• Law on Tax Administration No. 38/2019/QH14.
• Decree 132/2020/ND-CPRegulations on tax management for enterprises with related-party transactions (original document).
• Decree 20/2025/ND-CPAmendments and additions to certain articles of Decree 132 (Latest update applicable to the tax periods 2025 and 2026).
• Circular 45/2021/TT-BTCGuidance on the application of Advance Pricing Agreements (APAs).

The core principle throughout the process of exempting businesses from reporting related-party transactions is the "Arm's Length Principle." This means that even if your business is exempt from reporting related-party transactions, you still have the obligation to demonstrate and ensure that the prices and profit margins in transactions with related parties are equivalent to transactions between independent parties in the market.

Details of 4 cases exempt from preparing related-party transaction documents in 2026.

Based on Article 19 of Decree 132/2020/ND-CP, businesses can confidently apply for exemption from filing related-party transaction documents if they fall into one of the following four categories:

Case 1: Revenue and transaction value are below the safety threshold.

This is the most widely applicable case for small and medium-sized enterprises (SMEs). An enterprise is exempt from filing related-party transaction records if it simultaneously satisfies two quantitative conditions:

• Total revenue generated during the tax period is less than 50 billion VND.
• The total value of related-party transactions arising during the tax period is less than VND 30 billion.

Note: Many entities miscalculate transaction values, leading to the loss of exemption from related-party transaction reporting requirements. The total transaction value must include purchases, sales, borrowings, loans, leases, rentals, and management fees. If the total of these items exceeds 30 billion VND, the business needs to consult with relevant authorities. related party transaction advisory services Reputable sources for accurate advice and document preparation.

Case 2: The business has signed and is operating an APA agreement.

When a business proactively signs an Advance Pricing Agreement (APA) with the General Department of Taxation, transactions covered by this agreement are automatically exempt from the requirement to file related-party transaction documents. The business only needs to submit an annual APA report as per Circular 45/2021/TT-BTC. This is the highest level of tax safety, helping businesses completely eliminate transfer pricing risks for significant transactions.

Case 3: Perform a simple function and ensure a safe rate of return.

This exemption from the requirement to file related-party transaction documents applies to FDI enterprises operating under a purely processing, manufacturing, or distribution model. Conditions for eligibility for this exemption include:

• Revenue is below 200 billion VND.
• Simple function: The business does not own and does not generate income from intangible assets (such as technology copyrights, international trademarks, etc.).
• The net profit margin (EBIT/Revenue) must reach the minimum threshold: Distribution industry ≥ 5%, manufacturing industry ≥ 10%, and processing industry ≥ 15%.

In cases where actual profits fall below the above threshold, businesses are not allowed to arbitrarily apply for exemption from reporting related-party transactions. At this point, proactive action is necessary. hire someone to prepare related party transaction documents. Benchmarking (comparing profits with the market) is necessary to explain the decline in the company's profits.

Case 4: Domestic transactions between parties with the same corporate income tax rate.

Businesses are exempt from filing related-party transaction records for transactions with related parties that are subject to corporate income tax in Vietnam when:

• Both sides apply the same tariff rate (usually 20%).
• Neither party is currently eligible for corporate income tax incentives.

This regulation exempting related-party transactions from documentation is based on the logic that transferring profits between two parties at the same tax rate does not result in a loss of national revenue.

Why do intangible assets exclude the right to be exempt from reporting related-party transactions?

In the case of exemption from filing related-party transaction records in case 3, the phrase "not owning intangible assets" is often misinterpreted. In 2026, tax authorities will focus on reviewing businesses that use the parent company's trademark but do not pay fees or participate in the common R&D process. If a business has transactions related to:

• Trademark usage rights (Royalty).
• Transfer of proprietary manufacturing technology.
• Utilize a global customer data management system.

That business would then be considered to have a "complex function" and would be required to prepare documentation for price determination, no longer enjoying the exemption from preparing related-party transaction documentation. This is a crucial point that businesses need to carefully review in their contracts with related parties.

Update on Decree 20/2025/ND-CP and its impact on the exemption from preparing related-party transaction documents.

Decree 20/2025/ND-CP sets stricter standards for linkage relationships. Most notably:

• Lending relationship (Point d, Clause 2, Article 5): A joint venture relationship is established when one party guarantees or lends at least 25% of equity capital and accounts for over 50% of the total value of medium/long-term debts.
• Interest expense restrictions: If total interest expense exceeds 30% of EBITDA, the disallowed portion may reduce net profit below 5%, 10%, or 15% of EBITDA. In this case, the company may lose its exemption from reporting related-party transactions under the "safe profit margin" category.

Therefore, businesses need to calculate carefully. related party transaction documentation costs compared to the risk of being assessed a tax liability in order to make a reasonable compliance decision.

A 4-step process for businesses to self-assess their eligibility for exemption from related-party transaction documentation.

To ensure that a business is truly safe from the requirement to file related-party transaction records, accountants need to do the following:

• Step 1: Identify new related parties. Update the list of related parties based on both ownership and borrowing or operating relationships according to Decree 132/2020/ND and Decree 20/2025/ND-CP amending and supplementing Decree 132.
• Step 2: Measure the revenue threshold of 50 billion VND and the total value of related-party transactions of 30 billion VND. Use audited financial statements to accurately determine revenue and total transaction value. If close to the threshold, extreme caution is needed regarding hidden fees.
• Step 3: Evaluate Function and Intangible Assets. Determine whether the business is truly operating with a simple function. Owning even a minor patent can result in the loss of the exemption from related-party transaction filing.
• Step 4: Prepare documentation proving eligibility for exemption from related-party transaction reporting. Prepare an internal explanatory statement explaining why the company is exempt from related-party transaction reporting. This statement must include data extracted from the accounting software.

Potential risks of arbitrarily applying for exemption from related-party transaction documentation.

Many businesses confidently believe they are exempt from filing related-party transaction records, but in reality, this is often rejected by the tax authorities during audits because:

• Data error: Failure to include the value of non-monetary transactions (such as asset loans, senior personnel loans).
• Incorrect business sector: The company is involved in both manufacturing and trading, but applies a profit margin of 5% to all activities (while manufacturing requires 10%).
• Lack of comparable documentation: Although exempt from filing related-party transaction records, if the purchase price of raw materials from the parent company is unusually high, the tax authorities still have the right to request an explanation using market data.

A real-world case study illustrates the risks of misunderstanding the filing waiver.

Company A in Binh Duong has revenue of 180 billion VND (below the 200 billion VND threshold) and a profit of 121 TP3T (above the 101 TP3T threshold for the manufacturing industry). The company itself determined that it was exempt from filing related-party transaction records. However, during an audit in 2025, the tax authorities discovered that Company A paid a monthly "Technical Support" fee to its parent company in South Korea. This fee was considered related to intangible assets (technical know-how).

Result: Company A was denied the right to be exempt from filing related-party transaction records, had its profit margin reassessed to 18%, and was ordered to pay back over 5 billion VND in corporate income tax along with late payment penalties.

Reference: Related party transaction documentation service

Summary of cases requiring declaration and exemption from preparing related-party transaction documents.

To help businesses easily determine whether they are required to prepare or are exempt from preparing transfer pricing documentation, it is necessary to compare each specific case with the corresponding declaration obligations under Articles 18 and 19 of Decree 132/2020/ND-CP. The table below summarizes the five most common situations and clearly indicates the extent to which businesses must prepare Form No. 01 and which cases are exempt from preparing transfer pricing documentation. This is an important basis to help businesses avoid confusion between "still required to declare" and "exempt from preparing transfer pricing documentation".

However, even if exempt, businesses are still required to fully declare Form No. 01 and related information regarding related-party relationships and transactions in their corporate income tax return. If the above conditions are not fully met, businesses must prepare complete national and global tax returns, and a Country-by-Country Report (if global consolidated revenue is 18,000 billion VND or more) to avoid the risk of tax assessment, back taxes, and penalties during tax audits.

Conclude

In the context of increasingly stringent transfer pricing controls by tax authorities, businesses should proactively review the conditions for exemption from filing related-party transaction records at the beginning of the year, and prepare a set of internal documents to be ready for explanation when necessary. For cases involving cross-border transactions, internal borrowing, service fee payments, or the use of intangible assets from the parent company, expert consultation is necessary to avoid misjudging the exemption eligibility.

If your business is wondering whether it truly qualifies for the exemption from filing related-party transaction records, or needs a quick risk assessment before tax settlement, proactively 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 is overseen 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.

Frequently Asked Questions about Exemption from Relational Transfer Transaction Filing

Below is a summary of the most challenging issues that businesses will likely encounter in 2026 related to the exemption from submitting related-party transaction documents: