Vietnam´s new Transfer Pricing Decree

Refinement of definitions and documentation requirements

Decree 255 introduces targeted refinements to certain definitions by cross referencing the Law on Tax Administration and related legal frameworks. This decree also reaffirms the requirement for transfer pricing documentation (TPD) to be prepared no later than the corporate income tax (CIT) finalization deadline and to be maintained for submission upon request.

Prescribed benchmarking data hierarchy

Decree 255 introduces the prescribed hierarchy of selecting data sources used in comparability analysis:

1. Public or official sources, including stock exchange data, commodity / service exchanges, national databases and other publicly available official sources.
2. Commercial databases.
3. Tax authority databases.

Streamlined TPD exemptions

The revenue threshold for the exemption from preparing TPD under the safe harbour rules is increased to VND500 billion from VND 200billion. In addition, the qualitative criteria of “simple and routine business activities” is removed when assessing the eligibility under the same regime.

Overhaul of Country-by-Country Report (CbCR) requirements

Decree 255 provides the following changes to Vietnam’s CbCR framework:

• Consolidated group revenue threshold is changed to EUR750 million, replacing the previous VND18,000 billion threshold.
• The threshold is determined based on the preceding financial year, with a specific foreign exchange conversion based on State Bank exchange rates.
• If an overseas headquartered company in Vietnam is required to submit their group’s CbCR, the CbCR must be submitted in XML format and within 12 months from the end of the Ultimate Parent Entity’s (UPE) fiscal year.
• A designated taxpayer is required to submit Form No.01/TB-BCLN to notify the tax authorities of the group’s CbCR filing entity in Vietnam no later than the last day of the UPEs fiscal year.
• CbCR data is not intended to form a basis for tax and transfer pricing adjustments.
• Local filing is not required where the CbCR is filed by the UPE or another designated group entity, and the relevant information exchange conditions are satisfied.
• Local filing is required where the foreign jurisdiction fails to exchange CbCR information with Vietnam despite having an agreement in place.
• Local filing is not required where the UPE is exempt in its home jurisdiction due to differences in thresholds, currency conversion or revenue calculation rules.
• Local filing applies where Vietnam meets international standards on confidentiality, consistency and appropriate use of CbCR data.