Transfer pricing rules in Vietnam require businesses to price related-party transactions according to the arm’s length principle, maintain appropriate documentation, and comply with tax declaration requirements. These rules are especially important for foreign-invested enterprises (FIEs), multinational groups, and companies that conduct intercompany transactions.

In Vietnam, transfer pricing compliance involves more than setting prices between affiliated companies. Businesses must also identify related parties, evaluate transaction terms, prepare supporting documents, and report relevant information to the tax authorities. Therefore, understanding the applicable rules helps companies manage tax risks and meet their obligations.

I. What Are Transfer Pricing Rules in Vietnam?

Transfer pricing refers to the prices that related parties charge for goods, services, financing, intangible assets, and other transactions. For example, a Vietnamese subsidiary may purchase products from its overseas parent company or pay a related entity for management services.

Vietnam applies the arm’s length principle to these transactions. In other words, related parties should establish prices and commercial conditions comparable to those that independent parties would agree to under similar circumstances.

This principle helps prevent businesses from shifting taxable profits between countries through artificial pricing arrangements. For instance, if a Vietnamese company pays an unusually high management fee to its foreign parent, the payment may reduce its taxable profit in Vietnam. Consequently, the tax authorities may examine the fee and adjust the company’s taxable income if the transaction fails to meet the applicable requirements.

For this reason, businesses should review both their pricing policies and the commercial evidence supporting each significant related-party transaction.

II. Legal Framework for Transfer Pricing in Vietnam

2.1. Applicable regulations

Vietnam’s transfer pricing framework establishes rules for identifying related parties, analyzing transactions, selecting pricing methods, declaring related-party dealings, and preparing supporting documentation.

Businesses must determine which regulations apply to their specific tax periods. In particular, they should verify the effective dates and transitional provisions of any new legislation before changing their compliance procedures.

The principal regulations have included Decree No. 132/2020/ND-CP and its amendment, Decree No. 20/2025/ND-CP. Companies should consult the latest official legal texts to confirm the rules that govern each reporting period.

2.2. Why businesses should review legal updates

Transfer pricing requirements can affect a company’s annual tax declarations, documentation process, and deductible expenses. Therefore, businesses should not automatically apply the thresholds or exemptions from an earlier tax period to a later one.

Instead, finance teams should check the applicable rules before preparing their annual corporate income tax (CIT) finalization return. They should also coordinate with the group’s tax department to ensure that the Vietnamese entity follows the correct local requirements.

Official legal references:

• Decree No. 132/2020/ND-CP – Government of Vietnam
• Decree No. 20/2025/ND-CP – Government of Vietnam

III. Which Businesses Must Follow Transfer Pricing Rules?

Vietnamese enterprises that conduct transactions with related parties must assess their obligations under the applicable transfer pricing regulations. Importantly, these rules cover both domestic and cross-border transactions.

Therefore, a company does not necessarily need a foreign shareholder to fall within the transfer pricing regime. Domestic businesses may also have related-party relationships through ownership, management, control, or qualifying financing arrangements.

3.1. Identifying related parties

Businesses should examine their ownership structure, management relationships, and financial arrangements to determine whether related-party relationships exist.

Common examples include:

• A Vietnamese subsidiary and its overseas parent company.
• Two companies controlled by the same entity or individual under the applicable legal tests.
• Enterprises with qualifying ownership or management relationships.
• Companies involved in certain lending, borrowing, or guarantee arrangements.
• Other relationships that meet the statutory definition of related parties.

However, a shared business contact or commercial relationship does not automatically establish a related-party relationship. Instead, companies should compare their actual circumstances with the legal criteria.

3.2. Transactions covered by the rules

Related-party transactions may include the purchase and sale of goods, management services, technical support, royalties, intellectual property arrangements, intercompany loans, guarantees, and asset transfers.

In addition, companies should examine cost-sharing arrangements and charges for administrative or other group services. These transactions may create tax risks when the company cannot demonstrate the services’ commercial value or explain how the parties calculated the charges.

IV. Transfer Pricing Methods in Vietnam

Businesses should select a transfer pricing method that reflects the nature of the transaction and the available evidence. Furthermore, the chosen method should account for the functions performed, assets used, and risks assumed by the parties.

4.1. Comparable Uncontrolled Price Method

The Comparable Uncontrolled Price (CUP) method compares the price in a related-party transaction with the price in a sufficiently comparable transaction between independent parties. Businesses may use this method when reliable price comparisons exist.

For example, a company may compare its intercompany sales price with prices charged to independent customers, provided that the transactions are sufficiently comparable.

4.2. Resale Price Method

The resale price method starts with the price at which a business resells a product to an independent customer. The company then deducts an appropriate gross margin to determine an arm’s length purchase price.

This method may suit distributors that purchase goods from related parties and resell them without making significant changes to the products.

4.3. Cost Plus Method

The cost plus method evaluates a related-party price by adding an appropriate profit mark-up to the supplier’s relevant costs. Consequently, it may help analyze certain manufacturing, processing, or service transactions.

However, companies should ensure that they calculate the cost base consistently and support the mark-up with appropriate evidence.

4.4. Transactional Net Margin Method

The Transactional Net Margin Method (TNMM) compares an appropriate net profit indicator with the results of comparable independent businesses or transactions. Businesses often consider this method when reliable price or gross-margin comparisons are unavailable.

Nevertheless, companies must select a suitable profit indicator and use reliable comparable data to support their analysis.

4.5. Profit Split Method

The profit split method evaluates how related parties should divide the combined profits from their transactions. It may suit arrangements in which both parties make significant contributions or conduct highly integrated activities.

Ultimately, businesses should document why their selected method suits the transaction. A group-wide pricing policy alone may not provide sufficient evidence of compliance with Vietnam’s requirements.

V. Transfer Pricing Documentation Requirements

Transfer pricing documentation explains how a company prices its related-party transactions and supports its tax position. Therefore, businesses should prepare the necessary information before filing their annual tax returns.

5.1. Related-party transaction declarations

Businesses within the scope of the regulations generally need to disclose their related-party relationships and transactions using the prescribed forms. They should also submit the required declarations with the relevant annual CIT finalization return.

However, the obligation to declare transactions differs from the obligation to prepare full transfer pricing documentation. As a result, an exemption from preparing a Local File or Master File does not automatically remove every disclosure requirement.

5.2. Local File

The Local File focuses on the Vietnamese taxpayer and its related-party transactions. Depending on the applicable rules, it may describe the company’s business activities, organizational structure, controlled transactions, functional analysis, pricing methods, comparable data, and financial information.

A strong Local File explains why the company’s pricing or profit margin reflects the transaction’s economic circumstances. It should also connect the analysis to supporting contracts, accounting records, and other relevant evidence.

5.3. Master File

The Master File provides information about the wider multinational group. For example, it may describe the group’s organizational structure, business operations, intangible assets, financing arrangements, and global financial position.

This information helps the tax authorities understand the Vietnamese entity’s role within the group. Moreover, it can help explain how related entities contribute to the group’s overall profitability.

5.4. Country-by-Country Report

A Country-by-Country Report (CbCR) presents information about a multinational group’s income, taxes, and economic activities across jurisdictions. The applicable reporting requirements depend on the statutory conditions, including relevant group revenue thresholds and reporting arrangements.

Therefore, multinational groups should identify the entity responsible for filing the report and determine whether the Vietnamese company has any local reporting obligations.

5.5. Preparing documentation on time

Companies should establish a regular process for collecting contracts, invoices, financial data, transaction details, and comparable information. In addition, they should reconcile transfer pricing documentation with accounting records and tax declarations.

By preparing these materials early, businesses can respond more efficiently to tax authority requests and reduce the risk of inconsistent reporting.

VI. Transfer Pricing Documentation Exemptions

Vietnam’s regulations provide certain exemptions from preparing full transfer pricing documentation. However, businesses must satisfy the specific legal conditions before claiming an exemption.

Depending on the applicable rules, relevant exemptions may concern qualifying small-scale related-party transactions, applicable Advance Pricing Agreements (APAs), or businesses that meet prescribed conditions for certain functions and profitability levels.

Nevertheless, companies should not assume that low revenue automatically removes their transfer pricing obligations. They must check the relevant transaction thresholds, business conditions, declaration requirements, and any other statutory criteria.

An APA may also help provide greater certainty for transactions within its agreed scope. However, companies should confirm the agreement’s validity, covered transactions, and reporting conditions before relying on it.

Because exemptions and thresholds can change, businesses should verify the current legal provisions for the tax year concerned.

VII. Transfer Pricing Risks and Tax Consequences

Transfer pricing errors can increase a company’s tax exposure and create additional compliance work. Therefore, businesses should identify potential weaknesses before the tax authorities conduct an inspection.

Common risks include:

• Charging related parties prices without reliable comparable data.
• Paying management or service fees without sufficient evidence of the services received.
• Applying intercompany interest rates without appropriate financial analysis.
• Omitting related-party transactions from tax declarations.
• Preparing incomplete or inconsistent transfer pricing documentation.
• Claiming an exemption without checking every applicable condition.

If the tax authorities identify non-compliance, they may adjust the company’s taxable income or disallow expenses in accordance with the applicable law. Consequently, the business may face additional CIT, late-payment interest, and administrative penalties.

For example, a company that deducts substantial related-party service fees should retain contracts, invoices, evidence of actual services, and a clear explanation of the business benefits. Otherwise, it may struggle to demonstrate that the expenses satisfy the relevant tax requirements.

VIII. How Businesses Can Improve Transfer Pricing Compliance

Businesses can reduce transfer pricing risks by incorporating the review into their regular accounting and tax procedures.

First, review the ownership structure, management arrangements, and financing relationships to identify related parties. Next, reconcile transaction records with contracts, invoices, accounting entries, and annual tax declarations.

Then, evaluate the company’s pricing policies and profit margins. Where necessary, prepare a functional analysis and obtain appropriate comparable data to support the chosen method.

Finally, determine which declarations and documents the company must prepare for the relevant tax period. Finance teams should also coordinate with overseas group entities to ensure that local documentation aligns with the group’s international tax policies.

By following these steps, businesses can improve the consistency of their tax reporting and respond more effectively to questions from the tax authorities.

IX. Transfer Pricing Support From MVA Vietnam

MVA Vietnam provides accounting and tax compliance support for businesses operating in Vietnam. For companies with related-party transactions, professional assistance can help identify reporting obligations, review accounting records, and organize supporting documentation. Depending on the company’s needs, MVA Vietnam can assist with related-party transaction reviews, tax declaration support, accounting reconciliation, and preparation for tax authority inquiries. Furthermore, each company should assess its circumstances individually because its obligations depend on its ownership structure, transaction profile, financial results, and the applicable legal framework. Contact MVA Vietnam to discuss your company’s accounting and tax compliance needs and determine the appropriate next steps for managing transfer pricing requirements in Vietnam.