Transfer pricing documentation is the file that stands between a multinational and Vietnam’s most aggressive audit programme – and the file only counts if it exists before the inspectors ask. Here is exactly what the three-tier package contains and how to build one that survives.
The three tiers of transfer pricing documentation
Local File
The Vietnamese entity’s own analysis: related-party transactions listed and characterised, the pricing method chosen and defended, comparables benchmarked against Vietnamese and regional data, and the functional analysis that justifies the margins. This is the tier auditors read line by line.
Master File
The group-level picture – global structure, intangibles, financing and the group’s transfer pricing policies. Usually prepared centrally; the local job is consistency, because contradictions between Master File and Local File hand auditors their opening argument.
Country-by-Country Report
Required for groups above the global revenue threshold, filed by the ultimate parent with notification duties locally. Vietnamese authorities use CbCR data to target – a low-substance, high-profit pattern invites the audit the other tiers must then win.
Thresholds, deadlines and exemptions
Decree 132/2020, as amended by Decree 20/2025, sets the frame: declaration duties for anyone with related-party transactions, full transfer pricing documentation above revenue and transaction-size thresholds, and narrow exemptions – the domestic-only same-rate relief being the most misread. The file must exist by the CIT finalisation date and be produced within tight statutory windows on request; the tax compliance calendar should treat it as a year-end deliverable, not an audit response.
What separates files that survive from files that fold
Contemporaneous benchmarking – comparables refreshed for the year in question, not recycled. Interquartile positioning with a documented rationale where results sit near the edges. Agreements that match the declared policy: an intercompany service fee without a service agreement is a deduction waiting to be denied, as our transfer pricing overview details. And loss-making narratives that explain commercial cause – Vietnamese auditors treat persistent losses beside group profitability as the default target.
Transfer pricing documentation: frequently asked questions
Can regional documentation be reused?
As a starting point only. Vietnamese transfer pricing documentation requires local comparables analysis and the Vietnamese-language file auditors will actually read – direct translation of a Singapore file fails predictably.
What if intercompany loans are involved?
Interest deductibility caps interact with the pricing analysis – the EBITDA-based limit binds many capital-intensive FDI structures and belongs in the same file.
What does preparation cost and take?
A first full Local File typically runs four to six weeks; annual refreshes are faster. Our tax team prepares and defends the files it writes; the governing decrees are published by the Ministry of Finance.
The audit itself: how a transfer pricing inspection unfolds
The request usually arrives inside a general tax audit: produce the file within the statutory window, measured in days rather than weeks. Inspectors then test three things in order.
Consistency – do the declared forms, the Local File and the audited accounts tell the same story? Substance – do the functions described match headcount, assets and the intercompany agreements actually signed? Benchmarking – are the comparables defensible, or can the inspector substitute a higher-margin set? Where transfer pricing documentation is missing or late, the law lets the authority deem margins using its own database, and the burden of dislodging a deemed assessment is heavy.
Companies that produce complete, consistent transfer pricing documentation on day one frequently see the transfer pricing line closed without adjustment; companies that ask for extensions rarely do.
Building the file as a system, not a scramble
The efficient pattern treats transfer pricing documentation as a year-round by-product rather than a March emergency. Intercompany agreements are signed before services flow, not backdated after. Each quarter, finance tags related-party invoices against the agreement register, so the transaction matrix reconciles itself. Benchmarking refreshes annually with the same comparable-selection logic, making year-on-year files consistent – inspectors read prior files, and an unexplained methodology change is itself a finding.
Groups that run this system spend less on compliance than groups that rebuild from zero each year, and they walk into audits with a file that has already survived internal challenge.
Where positions are genuinely uncertain – a hard-to-benchmark royalty, a loss-making launch period – the transfer pricing documentation should say so and argue the position, because a documented, reasoned position converts a potential evasion characterisation into an arguable difference of opinion, with penalties to match.
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.
