Vietnam Issues Decree 255/2026/ND-CP to Reform Transfer Pricing Regulations

Decree No. 255/2026/ND-CP

Refining Documentation and Thresholds

Decree 255/2026/ND-CP marks a notable shift in how businesses handle transfer pricing documentation. By replacing Decree 132 and Decree 20, the new regulation introduces several notable changes to the existing transfer pricing framework. The decree expands the definition of related parties while easing compliance for eligible businesses, including higher thresholds for transfer pricing documentation exemptions and revised Country-by-Country Reporting (CbCR) requirements. Companies are advised to review their ownership structures, financing arrangements, transfer pricing documentation, and reporting processes before the 2026 CIT filing season to ensure compliance with the new rules.

National Database for Comparability Analyses

Standardizing Data and Comparability Analyses

Decree 255 expands the data sources that may be used for transfer pricing comparability analyses by introducing the National Database as an additional source of comparable information. This is in addition to existing data sources, including commercial databases, publicly available information from securities markets and domestic and international commodity and service exchanges, information published by Vietnamese ministries and government authorities, other publicly available official sources, and tax authorities’ internal tax administration database. Furthermore, the decree establishes a specific order of priority for the use of comparable data, starting with publicly available information, including data published on securities markets, as well as domestic and international commodity and service exchanges.

To ensure full consistency between documentation and transfer pricing data reporting, the Local File must now include the exact same transaction name as reported in the transfer pricing data reporting form, along with the relevant activity code. The entity’s transfer pricing characterization must be stated explicitly in the Local File, as the previously common approach of using flexible or vague descriptions is no longer acceptable. Additionally, for all transactions involving intangibles, the decree requires a more detailed functional analysis based on DEMPE functions—development, enhancement, maintenance, protection, and exploitation. Taxpayers must demonstrate how these functions are carried out within the group, what assets and risks are involved, and how these factors influence value creation.

OECD’s benefit test concept

Alignment with Global Standards and Service Testing

The decree introduces a mandatory benefit test for intra-group financial and non-financial services. Recipient taxpayers must show and document that services received provide economic or commercial value, consistent with the OECD’s benefit test concept. This includes demonstrating the business rationale, expected or actual benefits, and substantiating that an independent company would be willing to pay for the service. Failure to meet these documentation expectations can trigger transfer pricing adjustments.

Law on Tax Administration No. 38/2019/QH14

Revisiting the Related-Party Definition and Historical Context

Discussing the predecessor, Decree No. 20/2025/ND-CP, Ms. Dinh Mai Hanh, Tax Partner and National Transfer Pricing Leader at Deloitte Vietnam, emphasized that recent regulatory changes have played an important role in eliminating barriers and enhancing access to financing for enterprises in Vietnam by removing the classification of commercial banks as related parties. Previously, tax authorities intensified oversight of high-value financing transactions, particularly where enterprises borrowed from commercial banks. Tax authorities identified instances where corporate groups intentionally structured loan transactions through banks as intermediaries to minimize tax liabilities or shift profits offshore. In these instances, parent companies deposited funds with a commercial bank, which subsequently extended a loan to the subsidiary in Vietnam under arm’s-length terms, masking the true nature of the related-party transaction.

The foundation for these administrative principles was established earlier, notably through the Law on Tax Administration No. 38/2019/QH14, effective July 1, 2020, which introduced the arm’s-length principle and the principle of substance of business operations. These concepts were further solidified in Decree 132/2020/ND-CP.