Decree on tax administration of enterprises having related-party transactions issued

The Decree provides regulations on principles for tax administration of related-party transactions; associated parties; analysis, comparability analysis and selection of independent comparables; methods of determination of prices of related-party transactions; determination of deductible expenses for tax purposes; rights and obligations of taxpayers in declaration and preparation of Transfer Pricing Documentation; responsibilities relating to the Country-by-Country Report; and responsibilities of state agencies in tax administration applicable to taxpayers having related-party transactions.

Regarding the principles of application, Clause 1, Article 3 provides that taxpayers having related-party transactions shall eliminate factors that reduce tax liabilities due to the associated relationships' control or influence in order to declare and determine tax liabilities for related-party transactions equivalent to those applicable to independent transactions under comparable conditions. Tax authorities shall administer and inspect prices of related-party transactions in accordance with the Law on Tax Administration.
 

Notably, Article 5 specifies cases in which parties are regarded as associated parties, including:

• An enterprise directly or indirectly holds at least 25% of the contributed capital of another enterprise;
• Two enterprises have at least 25% of their contributed capital held by the same third party;
• An enterprise provides guarantees or loans that satisfy the prescribed conditions regarding capital contribution ratio and outstanding loan balance;
• Enterprises are subject to the management or control of the same individual or related persons;
• The relationship between a credit institution and its subsidiary, controlling company or affiliated company in accordance with law.

Chapter III of the Decree provides for the determination of deductible expenses for tax purposes and the rights and obligations of taxpayers.

Under Clause 3, Article 16, the total deductible interest expense in determining corporate income tax (CIT)-taxable income of an enterprise having related-party transactions must not exceed 30% of the enterprise's total net profit generated from business activities during the tax period plus interest expense and depreciation expense incurred during the period. Any excess interest expense may be carried forward to subsequent tax periods for a maximum of five years.

In addition, Article 18 provides that taxpayers are responsible for declaring information on associated relationships and related-party transactions, and for preparing, retaining and providing the Transfer Pricing Documentation in accordance with regulations.

Decree No. 255/2026/ND-CP takes effect on July 1, 2026, applies from the 2026 corporate income tax (CIT) period, and simultaneously repeals Decree No. 132/2020/ND-CP and Decree No. 20/2025/ND-CP from the same date.