Transfer Pricing Tax Audit Vietnam is an important issue for foreign-invested enterprises (FDI) and multinational companies. When businesses trade with related parties, tax authorities may check whether their prices follow Vietnamese tax rules. They may also review whether the company has paid the correct amount of corporate income tax (CIT). In Vietnam, Decree No. 132/2020/ND-CP sets out key rules for related-party transactions. In addition, Decree No. 20/2025/ND-CP amended several parts of these rules and took effect on March 27, 2025. Therefore, businesses should review their pricing policies, tax returns, and supporting records before a tax audit. This guide explains how transfer pricing tax audits work in Vietnam. It also covers the key documents, common tax risks, and steps that FDI companies can take to prepare.

I. What Is a Transfer Pricing Tax Audit in Vietnam?

1.1. Meaning of a Transfer Pricing Tax Audit

A transfer pricing tax audit is a review of transactions between related parties. During this review, tax authorities check whether the prices and terms follow the arm’s length principle.

Under this principle, related parties should set prices in a way that is in line with similar deals between independent businesses. As a result, companies should be able to explain how they set their prices and why those prices are fair.

In Vietnam, a transfer pricing review may form part of a wider tax audit or inspection. For example, tax officers may check sales, service fees, loan interest, and royalty payments between group companies.

They may also review the work each party does, the assets it uses, and the risks it takes. This helps them assess whether the reported profit matches the company’s business activities.

1.2. Which Companies May Face a Transfer Pricing Audit?

Transfer pricing rules are important for businesses that have related parties and carry out transactions with them. These businesses may include:

• FDI companies that buy goods from their overseas parent companies.
• Vietnamese firms that pay management fees to foreign group companies.
• Companies that receive loans or guarantees from related parties.
• Manufacturers that pay fees to use group brands or technology.
• Businesses that sell goods or services to other companies in the same group.

However, having a related party does not mean that a company has broken the law. Instead, the company must check which rules apply to its transactions and whether it meets any exemption conditions.

1.3. Key Legal Rules in Vietnam

Businesses should review the following laws and regulations before a tax audit:

• Decree No. 132/2020/ND-CP: Sets out the main rules for tax on related-party transactions.
• Decree No. 20/2025/ND-CP: Changes and adds to several rules under Decree No. 132/2020/ND-CP.
• Law on Tax Administration No. 38/2019/QH14: Sets out the wider rules for tax filing, tax checks, and tax inspections.

In addition, companies should check later changes and guidance that apply to the tax year under review. This helps them avoid using old rules when preparing their records.

You might not know >> Accounting services for FDI enterprises

II. How Does a Transfer Pricing Tax Audit Work?

2.1. Review of Related-Party Transactions

First, tax authorities may check the company’s related parties and the deals it has made with them. They may compare the tax returns with contracts, invoices, payment records, and financial statements.

For example, the review may cover goods sold to a parent company, fees paid to group members, or loans from related parties.

Therefore, businesses should make sure that the figures in their tax returns match their accounting records. If there are any differences, they should find the cause and prepare a clear explanation.

2.2. Review of Transfer Pricing Documents

Next, tax authorities may ask to see the company’s transfer pricing documents. These records explain how the company sets prices for deals with related parties.

Depending on the rules and any available exemptions, the required documents may include:

• Local File: Details of the Vietnamese company and its related-party deals.
• Master File: Details of the group’s business, structure, and pricing rules.
• Country-by-Country Report (CbCR): Data on the group’s income, taxes, and business activities in each country, where required.

However, not every company must prepare all three documents. The rules depend on factors such as the company’s size, group details, and the type of transactions. Therefore, businesses should check the rules that apply to their own case.

2.3. Review of Pricing Methods

Tax authorities may also check whether the company has used a suitable method to set its prices.

For example, the company may use the comparable uncontrolled price method, resale price method, cost-plus method, or another method allowed by the rules.

During the review, tax officers may look at:

• The type and nature of the goods or services.
• The work done by each party.
• The assets used and risks taken.
• The terms of the deal.
• Market conditions and data from similar deals.

For instance, a Vietnamese factory may earn a low profit because it performs routine production work. However, the company should have evidence to explain why its profit level fits its role and the risks it takes.

2.4. Tax Adjustments After the Audit

If tax authorities find that the company has not followed the rules, they may adjust its taxable income where the law allows.

As a result, the company may have to pay more corporate income tax. It may also face late-payment interest or a fine if the legal conditions are met.

Still, a transfer pricing audit does not always lead to extra tax. The result depends on the facts, the records, and the rules that apply to the case.

III. Documents to Prepare for a Transfer Pricing Tax Audit

3.1. Company and Related-Party Records

First, businesses should prepare records that show their ownership structure and links with related parties.

These records may include:

• Business registration documents.
• Investment registration documents, where relevant.
• Group ownership charts.
• Details of related parties.
• Contracts for deals between group companies.
• Annual related-party transaction declarations.

These records help explain who the related parties are and why the rules apply to their deals.

3.2. Accounting and Tax Records

Next, companies should gather their accounting and tax records. These records help show how much the company has paid or received from related parties.

Useful documents include general ledgers, financial statements, invoices, payment records, and corporate income tax returns.

In addition, businesses should compare the values in their tax returns with those in their accounting systems. This step can help them find errors before tax officers do.

If the figures do not match, the company should check the cause. It should then correct any errors where required and keep records of the steps taken.

3.3. Transfer Pricing Documents

Where the rules require them, businesses should prepare a Local File and a Master File.

These documents should explain the group structure, business activities, related-party deals, pricing methods, and financial results. They should also show how the company chose its pricing method and assessed similar deals.

Moreover, the documents should reflect the company’s real business activities during the tax year. A report that does not match the facts may fail to support the company’s position during an audit.

3.4. Evidence for Intra-Group Services

Management fees and service fees paid to group companies may receive close attention during a tax audit. This is especially true when the company cannot show what services it received.

To support these costs, businesses should keep:

• Signed service contracts and any changes to them.
• Invoices and proof of payment.
• Service reports, emails, and work records.
• Evidence that the services were useful to the business.
• Cost sharing and fee calculation records.
• Details of how the fees were set.

Most importantly, the company should be able to show that the services took place. It should also explain why the services were needed and how the fees were worked out.

IV. Common Transfer Pricing Risks in Vietnam

4.1. Repeated Losses

A company that reports losses for several years may face questions from tax authorities, especially if it keeps trading with related parties.

However, losses do not always mean that the company has broken transfer pricing rules. For example, a business may face high start-up costs, weak demand, or a fall in market prices.

Therefore, companies should keep records that explain their losses. They should also show how their pricing rules match their work, assets, and risks.

4.2. Management Fees Without Clear Proof

Tax authorities may question fees paid to a parent company if the Vietnamese business cannot show that the services were provided.

To reduce this risk, companies should keep service reports, emails, contracts, and payment records. They should also explain how the fees were shared among group companies.

In addition, the company should show why the services were needed for its business. Clear records can help support the tax treatment of these costs.

4.3. Loans and Interest Between Related Parties

Loans between group companies may raise questions about interest rates, payment terms, and the borrower’s ability to repay the loan.

Therefore, businesses should review whether their loan terms are fair and supported by evidence. They should also check whether interest costs meet the rules for tax deductions.

In some cases, limits on deductible interest may apply. For this reason, companies should review their financing costs as part of their tax checks.

4.4. Missing or Conflicting Records

Missing contracts, incorrect figures, and incomplete tax returns can make a tax audit more difficult.

For example, the amount shown in a tax return may not match the amount in the company’s ledger. Similarly, a transfer pricing report may describe a deal differently from the signed contract.

To avoid these problems, businesses should check their records before filing tax returns. They should also keep their contracts, accounts, and transfer pricing documents in line with one another.

V. How to Prepare for a Transfer Pricing Tax Audit

5.1. Check Tax Compliance in Advance

First, businesses should review their related parties, transactions, and tax filings. They should confirm which documents they must prepare and whether they qualify for any exemptions.

In addition, they should check that the correct forms and rules have been used for the tax year in question.

This early review can help the company find gaps before a tax audit begins.

5.2. Match Accounting Records With Tax Returns

Next, the accounting team should compare related-party transaction figures across contracts, invoices, ledgers, financial statements, and tax returns.

If the figures do not match, the team should find out why. It should then correct any errors where needed and keep a record of the changes.

As a result, the company will be better prepared to answer questions from tax officers.

5.3. Review the Transfer Pricing Policy

Businesses should also check whether their pricing policy matches their real work and business risks.

For example, a distributor that takes limited risks may have a different profit level from a company that carries out research or production. Therefore, the pricing method should fit the facts of the business.

The company should also keep evidence to support its method and explain its financial results.

5.4. Organize Documents and Assign Tasks

Companies should store records by tax year and transaction type. They should also decide who will handle requests from tax authorities.

For example, the accounting team may prepare the financial records, while the legal team reviews contracts. Meanwhile, the parent company may need to provide group-level data.

With clear roles, the company can gather information faster and reduce delays during the audit.

5.5. Seek Professional Support

Transfer pricing rules can be hard to apply, especially when a company has many cross-border deals.

For this reason, businesses may seek help from tax and accounting experts. These experts can review the company’s records, check its pricing methods, and help find areas that need attention.

They can also help the company prepare clear answers to questions from tax authorities.

VI. Consequences of Transfer Pricing Non-Compliance

6.1. Additional Corporate Income Tax

If a transfer pricing adjustment increases taxable income, the company may have to pay extra corporate income tax.

However, the amount depends on the facts of the case, the tax year, and the rules that apply. Any tax incentives or other relevant provisions may also affect the final amount.

6.2. Late-Payment Interest and Fines

In some cases, a company may also have to pay late-payment interest or an administrative fine.

The outcome depends on the type of breach and the legal rules that apply. Therefore, businesses should review each case carefully rather than assume that every tax adjustment leads to the same penalty.

6.3. Impact on Business Operations

A tax audit can take up time and resources. It may also create uncertainty about tax costs and financial reports.

However, good preparation can make the process easier. When records are clear and complete, companies can respond to questions faster and explain their tax position more clearly.

VII. Conclusion

Transfer Pricing Tax Audit Vietnam is an important issue for FDI companies and multinational groups. Businesses should understand Decree No. 132/2020/ND-CP and its changes under Decree No. 20/2025/ND-CP. To prepare for a tax audit, companies should check their related-party deals, tax returns, accounting records, and transfer pricing documents. They should also keep clear proof of services, loans, and other payments between group companies. By reviewing these records early, businesses can find gaps, reduce tax risks, and respond more clearly to tax authorities. MVA Vietnam provides accounting, tax, and business support for companies operating in Vietnam. Contact our team to discuss your transfer pricing compliance needs and prepare for a tax audit.

MVA VIETNAM ACCOUNTING AND AUDITING COMPANY LIMITED