A transfer pricing audit Vietnam tax authorities conduct is now a routine feature of holding a foreign-invested company, not an exceptional event. The framework is Decree 132/2020/ND-CP, amended by Decree 20/2025/ND-CP, and enforcement has become both more frequent and more technically capable.
This guide sets out the six strategies that determine outcomes, based on how audits actually run rather than how the rules read.
Transfer Pricing Audit Vietnam: Know Which Relationships Are Caught
Decree 20/2025/ND-CP amended the related party definitions, removing the guarantee and financial assurance criterion for credit institutions and adding two categories: an independently accounting branch, and the relationship between a credit institution and its subsidiary, controlling company or associated company.
Companies that concluded before 2025 that they had no related party transactions should re-run the analysis. A transfer pricing audit Vietnam officers open frequently begins with a relationship the taxpayer did not think was in scope.
Transfer Pricing Audit Vietnam: Have Contemporaneous Documentation
The local file, master file and country-by-country report must exist before the corporate income tax finalisation deadline, not be assembled when the audit letter arrives. Documentation produced after the event carries materially less weight and, where it is absent altogether, the authority may determine prices on the basis of its own database.
Deemed pricing is the worst outcome available, because it removes the taxpayer’s ability to argue comparability. The cost of preparing documentation is always less than the cost of contesting a deemed assessment.
Transfer Pricing Audit Vietnam: Manage the Interest Deductibility Cap
Net interest expense is deductible only up to a proportion of earnings before interest, tax, depreciation and amortisation, with non-deductible amounts carried forward for a limited number of years. Decree 20/2025/ND-CP addressed the treatment of amounts unrelieved by the end of the 2023 tax period, allocating them evenly across the remaining carry-forward period.
The cap applies at the level of the Vietnamese company regardless of where in the group the debt originates, so thin capitalisation planning done at group level frequently fails in Vietnam. Our note on offshore loan registration covers the regulatory side of intercompany debt.
Transfer Pricing Audit Vietnam: Choose and Defend Comparables
Vietnamese officers scrutinise the comparable set closely, and the most common challenge is the use of regional comparables where Vietnamese companies are available in commercial databases. Where regional data is used, the file should explain why, with a documented search strategy and rejection reasons.
Loss-making years attract particular attention. A company that reports losses while performing routine functions for a profitable group will be asked to explain why a routine service provider bears entrepreneurial risk, and the answer must be in the functional analysis rather than invented during the audit.
Transfer Pricing Audit Vietnam: Run the Audit Process Properly
Respond to information requests within the stated deadlines, keep a single channel of communication, and answer the question asked rather than volunteering group material that opens new lines of enquiry. Meetings should be attended by someone who understands both the transfer pricing model and the Vietnamese process.
Where an adjustment is proposed, the taxpayer has the right to explain before the conclusion is finalised. That stage is where most reductions are achieved, and it is frequently wasted by companies that treat the draft conclusion as final.
Transfer Pricing Audit Vietnam: Consider an Advance Pricing Agreement
An advance pricing agreement provides certainty for a defined period and removes the annual audit risk for the covered transactions. The process is demanding and slow, but for groups with large, stable intercompany flows it is often the better economics.
Bilateral agreements involving the counterparty jurisdiction give the strongest protection against double taxation. Our guides to transfer pricing documentation and tax consulting set out the preparation required.
Frequently Asked Questions
How far back can an audit reach?
Assessment periods extend over several years, and transfer pricing adjustments frequently cover multiple financial years in one conclusion.
Are small companies exempt from documentation?
Exemptions exist for taxpayers below revenue and transaction thresholds and for those transacting only domestically with the same tax rate, but the declaration form is still required.
Does a cost-plus model avoid audit?
No. The mark-up must be benchmarked and the functional analysis must support the characterisation.
Can penalties be reduced?
Voluntary disclosure before an audit opens generally produces a better outcome than defending a position discovered by the authority.
Prepare Before the Letter Arrives
IVLF Advisors prepares contemporaneous documentation, benchmarks intercompany pricing, defends audits and negotiates advance pricing agreements. See also our transfer pricing practice and guidance from the Ministry of Finance. Contact our team.
This article is provided for general information only and does not constitute legal advice for any specific case. Regulations may change – please consult a qualified professional before acting. Should further analysis be required, please contact one of our lawyers below.
