Transfer pricing is familiar territory for any group with related-party transactions in Vietnam. This article provides general information only and is not legal advice for any specific case. Regulations may change – please consult a professional before acting.
Transfer pricing is familiar territory for any group with related-party transactions – yet many still assume it is inherently illegal tax evasion. In reality, transfer pricing can be conducted entirely lawfully and is an effective financial-management tool. Here is how lawful transfer pricing works in Vietnam.
1. What Is Transfer Pricing and Why Does It Matter?
Transfer pricing is the pricing of transactions between related parties – group companies buying and selling goods, providing services, lending or transferring intangibles. It matters because it:
- optimises tax – profits can be allocated across jurisdictions lawfully, provided the rules are respected;
- measures performance – groups can assess each subsidiary’s true contribution;
- is mandatory compliance – failure to follow TP rules invites reassessments and penalties.
2. The Vietnamese Legal Framework
- Decree No. 132/2020/ND-CP – the cornerstone regulation on tax administration for enterprises with related-party transactions: market-principle pricing and TP documentation requirements;
- Decree No. 20/2025/ND-CP – amending Decree 132 with detailed guidance on declaring, computing and paying tax on related-party transactions, and confirming the three-tier documentation package: Master File, Local File and Country-by-Country (CbC) Report, to be produced to the tax authority on request.
3. Conditions for Lawful Transfer Pricing
- The arm’s length principle: related-party prices must match what independent parties would agree in comparable conditions. Example: if Company A (Vietnam) sells to related Company B (offshore) at USD 100/unit, and unrelated customers pay the same USD 100, the transaction is compliant – intra-group pricing exists, but the state loses no revenue;
- Documentation: prepare and retain the TP file proving arm’s length pricing under Decree 132;
- Full and accurate declaration of related-party transactions in the CIT return.
4. Practical Solutions for Compliant Optimisation
- An internal transfer pricing policy: consistent pricing rules and methods for all related-party transactions, anchored in the arm’s length principle;
- Three-tier documentation maintained continuously – Master File, Local File, CbC Report – your primary legal evidence in a tax audit;
- Cost discipline: management fees, advertising charges and intercompany loans priced fairly and documented;
- Professional advice: TP sits at the intersection of accounting, finance and law – a well-built defence file costs far less than a reassessment.
Conclusion
Transfer pricing is not the enemy – undocumented transfer pricing is. With the right policy, files and declarations, related-party transactions can be both efficient and fully defensible before the Vietnamese tax authority.
Need a defensible transfer pricing position?
IVLF Advisors builds TP policies, prepares Master/Local Files and CbC reports, and represents clients before the tax authority. Explore our Tax practice or contact us for a consultation.
Transfer pricing compliance: FAQ
Who must prepare transfer pricing documentation?
Any enterprise with related-party transactions falls under the declaration rules, with full Local File and Master File obligations triggered by the revenue and transaction thresholds in Decree 132/2020 as amended by Decree 20/2025. The exemptions are narrow and frequently misread – domestic transactions between parties taxed at the same rate are relieved from documentation, not from declaration.
When must the file be ready?
Transfer pricing documentation must exist before the annual CIT finalisation is filed and be produced within strict deadlines when inspectors request it. Files assembled after the request arrives rarely survive scrutiny; contemporaneous preparation is the whole game. Official guidance is published by the Ministry of Finance and the tax authority.
What draws an audit?
Persistent losses alongside group profitability, service and royalty fees to parents, thin margins against sector benchmarks, and restructurings that move functions offshore. Each pattern has a defensible answer when the transfer pricing analysis is honest and the benchmarking current – and none has a good answer improvised in an audit room.
How can IVLF help?
We prepare and defend transfer pricing files, align intercompany agreements with the declared policy, and represent groups through audits and mutual agreement procedures – one team covering the tax, legal and documentation strands together.
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.
