The exemption from preparing transfer pricing documentation is an important mechanism that helps businesses significantly reduce compliance costs and the burden of preparing transfer pricing documentation in 2026. However, not all businesses with related-party transactions are eligible for this exemption. Even a slight miscalculation of revenue thresholds, transaction values, or profit margins—or the omission of intangible assets—can result in the denial of the exemption, back taxes, and fines amounting to billions of dong. This article will provide a comprehensive analysis of the cases eligible for exemption from preparing documentation under the latest regulations, clarify the difference between exemption from filing and exemption from preparing documentation, while guiding businesses on how to self-assess eligibility, identify risks, and stay updated on notable changes under Decree 255/2026/NĐ-CP.
Legal Basis and Core Principles
The content of this guide on exemptions from filing requirements is based on the most up-to-date body of laws and regulations as of 2026:
The core principle underlying the entire process—even for exempted entities—is the “arm’s-length principle.” This means that even if your business is exempt from preparing transfer pricing documentation, it is still obligated to demonstrate and ensure that the prices and profit margins in transactions with related parties are comparable to those in transactions between independent parties in the market.
Details on Cases Exempt from Preparing Related-Party Transaction Documentation in 2026
Pursuant to Article 19 of Decree No. 255/2026/ND-CP, businesses may confidently apply for an exemption 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 have miscalculated their transaction values, resulting in the loss of their exemption from filing requirements. The total transaction value must include purchases, sales, borrowing, lending, leasing, renting, and management fees. If the total of these items exceeds 30 billion, the business should consult 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.
Once a business has proactively entered into an Advance Pricing Agreement (APA) with the General Department of Taxation, transactions covered by this agreement are automatically exempt from filing requirements. The business is only required to submit the annual APA Report in accordance with Circular 45/2021/TT-BTC. This is the most effective mechanism for ensuring tax compliance, helping businesses completely eliminate transfer pricing risks for material transactions.
Key Changes in Decree No. 255/2026/NĐ-CP: Elimination of the “simple business function” requirement and an increase in the revenue threshold
This is an exemption from the requirement to prepare a report determining the price of related-party transactions for FDI enterprises operating under a pure processing, manufacturing, or distribution model. The conditions for eligibility under this policy include:
- Raise the revenue threshold from 200 to 500 billion dong.
- With the repeal of the “simple function” requirement, businesses do not own or 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%.
If the actual profit is below the upper threshold, the business may not unilaterally apply the exemption. In this case, taking the initiative to 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.
A business is eligible for an exemption mechanism for transactions with related parties that are corporate income tax payers in Vietnam when:
- Both sides apply the same tariff rate (usually 20%).
- Neither party is currently eligible for corporate income tax incentives.
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.
Update on Decree No. 255/2026/NĐ-CP and Its Impact on the Conditions for Exemption from Preparing Related-Party Transaction Documentation
Decree No. 255/2026/NĐ-CP sets forth stricter standards regarding affiliated relationships. Most notably:
- The lender or guarantor is a credit institution that has no equity, investment, management, or control relationship with the borrowing enterprise;
- Neither party is subject to control, capital contribution, or investment from another party;
- Creditor, guarantor is The state-owned organization 100% has the function of buying, selling, and handling debt. and no control over businesses that borrow money.
- Decree 255/2026 succeeds Decree 132/2020 and Decree 20/2025 regarding interest expense limitations: If total interest expenses exceed 30% of EBITDA, the disallowed portion may reduce net income below the thresholds of 5%, 10%, or 15%. In that case, the company may lose its eligibility for the “safe profit margin” category.
Key Changes in Decree No. 255/2026/NĐ-CP on Transactions with Individuals
Businesses that conduct transactions with individuals who manage, control, or are related to those individuals:
- Transfer or receive at least 25% capital contribution; or
- Borrowing, lending, Borrow or lend at least 10% Equity at the time of the transaction.
See also: 12 Forms of Determining Affiliated Relationships Under Decree 255.
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 eligible for the exemption from filing financial statements, accountants must:
- Step 1: Identify new affiliated relationships. Update the list of affiliated parties based on both equity ownership and lending or management relationships, in accordance with Decree 255/2026/ND.
- 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 the functions and intangible assets, as well as the net profit margin, of the industry and sector in which the business operates.
- Step 4: Prepare documentation proving eligibility for the exemption. Prepare an internal explanatory statement outlining the reasons why the company qualifies for an exemption from preparing related-party transaction documentation. This explanatory statement must be accompanied by 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 450 tỷ (below the 500 tỷ threshold) and reported a profit of 12% (above the 10% threshold for the manufacturing sector). The company self-assessed that it qualifies for an exemption from preparing a transfer pricing documentation file. However, during an audit in 2025, the tax authority discovered that Company A was making monthly “Technical Support” payments to its parent company in South Korea. These payments were deemed to be related to intangible assets (technical know-how).
Result: Company A had its exemption from filing tax returns denied, had its profit margin reassessed to 18%, and was required to pay back more than 5 billion VND in corporate income tax, along with late payment penalties.
Summary of cases requiring declaration and exemption from preparing related-party transaction documents.
To help businesses easily determine whether they are required to prepare a transfer pricing documentation file or are exempt from doing so, they should compare each specific case with the corresponding reporting obligations under Articles 18 and 19 of Decree 255/2026/NĐ-CP. The table below summarizes the five most common scenarios and clarifies to what extent businesses are required to file Form No. 01 and under which circumstances they are exempt from preparing the transfer pricing documentation. This serves as an important reference to help businesses avoid confusion between “still required to file” and “exempt from preparing the transfer pricing documentation.”.
In case 02 enterprises have affiliated and GDLK relationships | Declaration regulations and declaration exemptions | ||||
| Information on affiliate relationships and GDLK (Form No. 01) | GDLK pricing profile (Including: National profile; Global profile; National profit margin report) | ||||
| Section I | Section II | Section III | Section IV | ||
| Enterprise A has domestic or foreign capital and enterprise B has foreign capital in Vietnam. Both enterprises have the same corporate income tax rate 20%, neither party enjoys corporate income tax incentives. | Establish | Establish | Free | Free | Free |
| Enterprise A has foreign capital located in Vietnam, enterprise B has foreign capital located outside of Vietnam. Incurring related transactions, enterprise A has annual revenue of less than 50 billion and the total value of all related transactions arising in the period is less than 30 billion VND/year. | Establish | Establish | Establish | Establish | Free |
| Enterprise A has an affiliated relationship with enterprise B. Both A and B have signed an advance pricing agreement (APA) according to Circular 201/2013/TT-BTC. | Establish | Establish | Establish | Establish | Free |
| Enterprise A has domestic or foreign capital, located in Vietnam. Enterprise B is foreign-owned and located outside of Vietnam. Companies with annual revenue of less than 500 billion VND (excluding revenue from the exploitation and use of intangible assets, such as royalty payments) have the following EBIT figures by industry: Distribution industry from 5% and above Manufacturing industry from 10% or more Processing industry from 15% or more | Establish | Establish | Establish | Establish | Free |
| Both businesses have related relationships other than the above cases. | Establish | Establish | Establish | Establish | Establish |
However, even if eligible for an exemption, businesses are still required to fully complete Form No. 01 and provide all relevant information regarding related-party relationships and transactions in their corporate income tax return. If the above conditions are not fully met, businesses must prepare a complete National File, the Global File, and the Country-by-Country Report (if consolidated global revenue reaches 750 million EUR or more) to avoid the risk of tax assessments, back taxes, and penalties during a tax audit.
Conclude
As tax authorities continue to tighten their oversight of transfer pricing, businesses should proactively review the conditions for exemption from preparing transfer pricing documentation from the outset, while also preparing a set of internal supporting documents to be ready to provide explanations when necessary. For cases involving cross-border transactions, intra-group loans, service fee payments, or the use of intangible assets from a parent company, consulting with experts is essential to avoid misinterpreting the scope of the exemption.
If your business is unsure whether it is actually exempt from filing a transfer pricing documentation report, or if you need to conduct a quick risk assessment before the tax filing deadline, take the initiative to Contact MAN – Master Accountant Network For free support and advice!
Contact information MAN – Master Accountant Network
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Responsible for production and professional content review by: Mr. Le Hoang Tuyen – Founder & CEO of MAN – Master Accountant Network. He is a CPA Vietnam auditor with over 30 years of in-depth experience in accounting, auditing, taxation, and corporate legal consulting.
Frequently Asked Questions about Exemption from Relational Transfer Transaction Filing
Are loss-making businesses exempt from filing related-party transaction records?
Absolutely NOT. Profit or loss is not the primary criterion. If revenue exceeds 50 billion VND and the total value of related-party transactions is greater than 30 billion VND, the business must still file a normal report even if it is operating at a loss. In fact, businesses with losses due to related-party transactions are at the highest risk of being audited for transfer pricing in 2026. In this case, the business's report must provide extremely detailed explanations of the objective reasons for the loss to avoid having its profit assessed.
Can bank loan transactions result in the loss of the exemption from filing related-party transaction records?
YES. According to Decree No. 255/2026/ND-CP, if a lending bank accounts for more than 50% of the total value of the enterprise’s medium- and long-term debt, and this loan amounts to at least 25% of the enterprise’s equity capital, then the bank and the enterprise are considered related parties. In that case, interest on bank loans is included in the value of related-party transactions. If the total value of these transactions exceeds 30 billion VND, the enterprise will not be eligible for the exemption from preparing financial statements based on the safety threshold.
If my company incurs franchise fees, am I eligible for the exemption from filing related-party transaction documents for businesses with simple functions?
Brand-related assets, such as franchise rights, are defined by law as intangible assets. Therefore, when your company incurs franchise fees paid to an affiliated party, this exemption is immediately revoked.
I was exempt from filing related-party transaction records, but the tax authorities still assessed my tax liability during an audit. Why is that?
There are two reasons for this. Firstly, the business qualifies for quantitative exemption from reporting related-party transactions, but its actual transaction prices violate the Governance Principle (for example, purchasing raw materials from the parent company at double the market price). Secondly, the business fails to provide documentation proving the objectivity of the transaction prices when requested for consultation (even though exempt from formal reporting, the business must still provide original documents, contracts, and pricing logic).
If annual revenue exceeds 50 billion VND but related-party transactions are below 30 billion VND, is the exemption granted?
No. The exemption under the safety threshold requires businesses to simultaneously meet both conditions: revenue below VND 50 billion and total value of related-party transactions below VND 30 billion. If either threshold is exceeded, the business will not be eligible for this exemption.
If a business is exempt from filing documents in 2025, will it automatically be exempt in 2026?
No. Exemption conditions must be reassessed each tax period. If revenue increases, new transactions occur, the loan structure changes, or transactions involving intangible assets arise, the business may no longer be eligible for exemption in the following year.