1. Introduction

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Vietnam has a mature and actively enforced transfer pricing regime. The rules apply to Vietnamese corporate income tax taxpayers that transact with related parties, whether those parties are located overseas or in Vietnam. Compliance is not limited to preparing a report: taxpayers must identify related-party relationships, disclose controlled transactions, apply the arm’s-length principle, maintain prescribed documentation and support the commercial substance of the arrangements recorded in their accounts.
 

The principal rules changed substantially in 2026. Decree No. 255/2026/ND-CP, issued on 30 June 2026, took effect on 1 July 2026 and applies from the 2026 corporate income tax period. It replaces Decree No. 132/2020/ND-CP and its amending Decree No. 20/2025/ND-CP, subject to a limited transitional rule for certain previously restricted interest expense. Businesses should therefore distinguish carefully between the rules governing periods through 2025 and those applying from 2026.
 

Vietnam’s framework broadly follows the OECD arm’s-length principle and the three-tier documentation model. Its local rules are nevertheless prescriptive. They contain detailed related-party tests, a statutory benchmark range, specific documentation exemptions, a 30% tax-EBITDA limit on net interest expense and local filing requirements that must be addressed independently of a group’s global policy.
 

The central practical point is that documentation cannot rescue an arrangement that lacks substance. The legal contract, actual conduct, functions, assets, risks, benefit received, accounting treatment and transfer pricing result must tell the same story.

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2. Legal and Regulatory Framework

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2.1 Core Legislation and Administrative Guidance

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The main instruments are:

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• Law on Tax Administration No. 108/2025/QH15. Effective from 1 July 2026, this law establishes the broader tax administration framework, including substance over form, the arm’s-length principle, taxpayer information duties, tax assessment, late-payment interest, MAP and APA authority.

• Law on Corporate Income Tax No. 67/2025/QH15 and Decree No. 320/2025/ND-CP. These instruments govern the corporate income tax base and the general conditions for deductibility. Transfer pricing compliance operates alongside, and does not replace, those ordinary deductibility rules.

• Decree No. 255/2026/ND-CP. This is the principal transfer pricing instrument for the 2026 corporate income tax period onward. It defines related parties and controlled transactions, prescribes comparability and pricing methods, regulates related-party service and interest deductions, sets the documentation and CbCR framework and gives the tax authority assessment powers.

• Decree No. 252/2026/ND-CP and Circular No. 89/2026/TT-BTC. These instruments implement the 2025 Law on Tax Administration and govern general tax administration procedures, including tax returns and treaty-related procedures.

• Circular No. 95/2026/TT-BTC. Effective from 1 July 2026, this circular governs tax treaty implementation, the mutual agreement procedure and advance pricing agreements. It replaces Circular No. 205/2013/TT-BTC and Circular No. 45/2021/TT-BTC.

• Decree No. 125/2020/ND-CP, as amended by Decree No. 310/2025/ND-CP. These instruments prescribe the administrative sanctions applicable to inaccurate returns, late or incomplete filings, failure to provide information and tax evasion.

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For tax periods through 2025, Decree No. 132/2020/ND-CP and Decree No. 20/2025/ND-CP remain relevant to the historical analysis. Decree 20 also contains transitional relief for certain interest expense carried forward from earlier periods. Decree 255 preserves the remaining transition period for qualifying taxpayers.

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2.2 Relationship with International Standards

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Vietnam is not required to copy the OECD Transfer Pricing Guidelines word for word, but the local framework reflects many OECD concepts: accurate delineation, functions-assets-risks analysis, comparability, economically significant risks, intangibles and value creation, the Local File/Master File/CbCR model, MAP and APAs.

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The local decree takes precedence for Vietnamese compliance. Important local differences include the mandatory disclosure form, prescribed documentation exemptions, the 35th-to-75th-percentile standard range, minimum numbers of comparables, a restriction against taxpayer adjustments that reduce Vietnamese tax and the 30% net-interest cap.

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Vietnam’s tax treaties may support relief from economic double taxation through a corresponding adjustment or MAP. A treaty does not remove the need to meet domestic filing deadlines or maintain a defensible Vietnamese transfer pricing file.

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3. Scope and Application of the Transfer Pricing Rules

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3.1 Definition of Related Parties

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Decree 255 uses both legal ownership tests and wider control tests. Related-party status can arise where:

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• one enterprise directly or indirectly owns at least 25% of the owner’s equity of another;

• the same third party directly or indirectly owns at least 25% of each of two enterprises;

• an enterprise is the largest shareholder of another and owns at least 10% of its total shares;

• one enterprise guarantees or lends to another, including through certain third-party loans supported by related-party financial resources, where the relevant loan balance is at least 25% of the borrower’s owner’s equity and exceeds 50% of its total medium- and long-term debt;

• one enterprise appoints more than 50% of the other’s management or controlling body, or appoints a member able to decide its financial or business policies;

• two enterprises have more than 50% common management members, or a common decision-making manager appointed by a third party;

• enterprises are managed or controlled by individuals within the wide statutory family relationship list;

• a head office and permanent establishment, or two permanent establishments of the same foreign organisation or individual, transact with each other;

• an individual controls enterprises through capital ownership or direct management;

• one enterprise, including an independently accounting branch, exercises de facto management, control or decision-making power over another;

• specified capital transfers, loans, lending, borrowing-for-use or lending-for-use occur with a controlling individual or a family member; or

• a credit institution transacts with its subsidiary, controlling company or associate as defined under the credit institution rules.

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The financing test has important exclusions. A genuine credit institution lender or guarantor should not create a related-party relationship solely under that test where it has no relevant investment, management or common-control connection with the borrower. A limited exclusion also applies to qualifying wholly state-owned debt trading or resolution organisations. These exclusions must be tested against the exact facts; ordinary bank documentation alone is not conclusive where group guarantees, common control or other links exist.

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Related-party status is determined for each tax period. Businesses should document ownership changes, board appointments, financing balances and changes in actual control throughout the year rather than relying only on the group chart at year end.

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3.2 Transactions Covered

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The definition of a related-party transaction is broad. It includes the purchase, sale, exchange, rental, lease, borrowing-for-use, lending-for-use, transfer or assignment of goods; services; loans and lending; financial services, guarantees and other financial instruments; tangible and intangible property; and arrangements for shared resources such as assets, capital, labour or costs.

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Common controlled transactions therefore include:

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• purchases and sales of raw materials, components, finished goods and fixed assets;

• contract manufacturing and processing arrangements;

• distribution and commission arrangements;

• management, technical, administrative, IT, marketing, R&D and other services;

• licences of trademarks, technology, software, know-how and other intangibles;

• loans, cash pooling, guarantees, deposits and other financing;

• cost contribution and cost allocation arrangements;

• transfers of businesses, shares, functions, assets or risks; and

• dealings between a head office and a permanent establishment.

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Transactions in goods or services whose prices are regulated by the State under the pricing legislation are excluded to the extent specified in Decree 255. That exclusion should not be extended to surrounding services, financing or other arrangements that are not themselves subject to State price control.

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Both cross-border and domestic transactions are in scope. A Vietnamese-to-Vietnamese transaction is not automatically low risk, particularly when one party has a tax incentive, a different corporate income tax rate, carried-forward losses or another attribute that can shift the timing or amount of tax.

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3.3 Documentation and Declaration Exemptions

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Decree 255 provides several forms of relief, but the conditions differ. Domestic same-rate exemption. A taxpayer is exempt from the price-determination sections of Appendix I and from the Local File and Master File where all related-party transactions are only with Vietnamese corporate income tax taxpayers, all parties apply the same corporate income tax rate and no party receives a corporate income tax incentive in the period. The taxpayer must still identify the relationships and claim the exemption in Sections I and II of Appendix I.

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Small-taxpayer documentation exemption. A taxpayer must still complete Appendix I but is exempt from preparing the full transfer pricing documentation where both:

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• total revenue for the period is below VND 50 billion; and

• the total value of all related-party transactions for the period is below VND 30 billion.​

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Both thresholds must be satisfied. The related-party transaction value is not a net amount and should be reconciled to the relevant Appendix I columns.

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APA-covered transactions. Transactions covered by a concluded APA and the required annual APA compliance report are exempt from the ordinary documentation requirement. Transactions outside the APA remain subject to the normal declaration and documentation rules.

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Prescribed-profit documentation exemption. A taxpayer can qualify where it has no revenue or expense from exploiting or using intangible assets, has revenue below VND 500 billion and earns at least the following net profit before interest and corporate income tax, excluding the difference between financial income and financial expense, as a percentage of net revenue:

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• Business functionMinimum margin

• Distribution5%

• Manufacturing10%

• Processing15%

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Where a taxpayer conducts more than one function, it should segment revenue and expense. If revenue is segmented but expense is not, expense is allocated based on revenue. If neither can be segmented, the highest relevant percentage applies. A taxpayer that does not apply the prescribed margin must prepare the full documentation.

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3.4 Effect and Limits of Exemptions

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A documentation exemption is not a statutory price safe harbour. It generally removes the obligation to prepare the Local File and Master File; it does not authorise non-arm’s-length pricing, override the ordinary corporate income tax deduction rules or prevent the authority from asking for underlying contracts, invoices and evidence.

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The 30% net-interest limitation also applies to taxpayers that qualify for an Appendix I or documentation exemption. A business should therefore assess related-party status and interest deductibility before deciding that no transfer pricing work is needed.

CbCR is a separate obligation. An entity exempt from a Local File may still have a CbCR notification or filing duty because it belongs to a large multinational group.

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3.5 Tax Incentives and Domestic Transactions

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Vietnam offers corporate income tax incentives to qualifying sectors, projects and locations. Transactions involving an incentivised entity require particular care because pricing can move income into a lower-tax or exempt period. The domestic same-rate exemption is unavailable if either party receives a corporate income tax incentive in the tax period.

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Businesses should examine not merely the headline rate but the actual status of each party: exemption periods, reduced rates, loss positions, project-level incentives and ring-fenced activities. Where a company operates both incentivised and ordinary activities, segmental accounts and consistent allocations become important to both transfer pricing and incentive calculations.

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4. The Arm’s-Length Principle

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Vietnamese taxpayers must remove the effect of the related-party relationship and determine taxable income as if comparable independent parties had transacted under comparable circumstances. The analysis begins with accurate delineation of the transaction, not with selection of a database result.

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Decree 255 expressly gives greater weight to economic substance and actual conduct than to the written agreement. A party receiving income should own or control the relevant rights, assets and risks and have the capacity to perform its role. A Vietnamese taxpayer claiming an expense should obtain a direct economic benefit or a contribution to its revenue or value creation.

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4.1 Approved Transfer Pricing Methods

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Decree 255 organises the methods into three groups, which encompass the five methods commonly used internationally:

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• Comparable uncontrolled price (CUP)Commodities, standard goods, royalties, loan interest and services where reliable internal or external price comparables exist

• Resale price methodA distributor that purchases from a related party and resells without material value addition or unique intangibles

• Cost plus methodContract manufacturing, processing and services where the cost base and gross mark-up can be reliably compared

• Transactional net margin method (TNMM)Routine manufacturing, distribution or service activities where reliable net-margin comparables are more available than price or gross-margin data

• Profit split methodHighly integrated operations, unique or valuable intangibles, complex finance, digital business, group synergies or situations in which multiple parties make unique contributions

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The most appropriate method is the method that fits the accurately delineated transaction and provides the most reliable result. A method should be applied consistently over the relevant business cycle unless facts or data justify a change. Method selection should not be driven solely by which approach produces the lowest Vietnamese taxable income.

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Internal comparables are ordinarily preferred when genuinely independent and sufficiently similar. For example, a manufacturer selling the same product to both related and independent customers may have a stronger internal CUP than an external TNMM study, provided volume, market, contractual, logistics and product differences are tested and adjusted.

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4.2 Comparability and Functional Analysis

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A defensible functional analysis identifies what each party actually does, which assets it actually uses and which risks it actually controls and bears. It should examine:

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• product, service and intangible characteristics;

• contractual terms and the parties’ actual conduct;

• functions such as procurement, manufacturing, quality control, logistics, marketing, sales, R&D, finance and strategic management;

• tangible assets, working capital and economically important intangibles;

• economically significant risks, including who makes risk decisions, who can mitigate the risk and who has the financial capacity to bear it;

• market, industry, geographical and regulatory conditions; and

• business strategies, start-up phases, restructuring and other commercial circumstances.

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A contractual allocation of risk is weak if the stated risk bearer has no people able to make the relevant decisions. Likewise, legal ownership of an intangible does not automatically entitle the owner to all residual profit. The analysis should identify development, enhancement, maintenance, protection and exploitation functions, together with control of those functions and funding risks.

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For TNMM, the tested party is usually the less complex party for which reliable comparable data can be found. The selected profit-level indicator must fit the value driver: operating margin on sales for many distributors, a net cost-plus indicator for routine manufacturers or service providers, or a return on assets where asset intensity is central. Segmental accounts should isolate the tested controlled activity and reconcile to the statutory financial statements.

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4.3 Comparable Selection and the Arm’s-Length Range

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Decree 255 prescribes a source and geographical hierarchy. A taxpayer should first consider internal comparables, then comparables resident in Vietnam, and then regional comparables from countries with similar industry conditions and economic development. Use of foreign-market comparables requires qualitative and quantitative analysis of geographical differences and adjustments where reliable.

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The decree also prioritises publicly available and official data, including listed-company, exchange, national-database and ministry information, ahead of commercial databases and the tax administration database. Commercial databases remain usable, but the search must be reproducible and the data source clear.

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A sound external benchmarking study normally records:

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• database name, version and extraction date;

• geographical, industry and keyword scope;

• independence and related-party ownership screens;

• quantitative screens for operating status, financial availability, persistent losses and transaction size;

• qualitative website and business-description review;

• each accepted and rejected company, with reasons;

• accounting adjustments, working-capital adjustments and other comparability adjustments;

• financial data for the tested party and selected comparables; and

• reconciliation of the result to the tax return and Appendix I.

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Price data should correspond to the transaction date or same tax period. Profit margin or allocation ratio data must cover at least three consecutive tax periods. Decree 255 also prescribes the minimum number of comparables after analysis and adjustment:

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• one comparable where there is no material difference;

• three comparables where reliable data permit elimination of all material differences; or

• five comparables where the available data permit elimination of most, but not all, material differences.

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Where the five-comparable case applies, the standard arm’s-length range is the 35th to 75th percentile and the median is the 50th percentile. If the taxpayer’s result is within the reliable range, no adjustment is required. If it falls outside, the taxpayer must select the point within the range that best reflects comparability, but the adjustment cannot reduce Vietnamese taxable income or tax payable. In an assessment, the tax authority may adjust to the median.

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The range is not a substitute for comparability. A large statistical set with weak functional similarity is less persuasive than a smaller, well-supported set that satisfies the decree’s requirements.

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5. Transaction-Specific Requirements

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5.1 Intra-Group Services

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Management, technical, IT, finance, HR, legal, marketing and other intra-group services are routinely challenged. The taxpayer must establish both that a service was actually performed and that it provided commercial, financial or economic value directly supporting the Vietnamese business. An independent enterprise in comparable circumstances should have been willing to pay for the service or perform it internally.

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Decree 255 denies or restricts deductions where:

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• the recipient pays a related party that has no relevant business activity, rights or responsibilities;

• the provider’s assets, employees and functions are not commensurate with the fee;

• the provider is resident in a jurisdiction without corporate income tax and the expense does not create revenue or value for the Vietnamese taxpayer;

• the service benefits only another group member;

• the activity is a shareholder or stewardship activity;

• the service duplicates an existing internal or external service without added value;

• the benefit is merely incidental to group membership; or

• an intermediary adds a mark-up to a third-party pass-through cost without adding value.

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Deductibility ordinarily requires contracts, invoices, calculation schedules, the group pricing policy, details of the cost pool and allocation keys and evidence of delivery. Useful evidence can include named personnel, qualifications, time records, work product, tickets, reports, meeting records, correspondence, system access logs, decisions implemented in Vietnam and proof of the resulting business benefit.

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The allocation key should reflect the expected consumption of the service. Headcount may suit HR support; transaction volume may suit accounts payable; users or licences may suit IT; and revenue may suit some commercial services. A single revenue allocation for every cost category is rarely persuasive without explanation. Exclude shareholder, duplicate, unrelated, capital and pass-through items before applying a mark-up.

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For specialised service centres or group synergies, the taxpayer should identify the total value created and the contributions of relevant participants. Any residual profit allocation should follow contribution after allowing an arm’s-length coordination or service return. A label such as “regional management fee” is not enough.

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5.2 Intangible Property and Royalties

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Royalty and licence payments require proof of the intangible, the payer’s right to use it, actual use in Vietnam and measurable benefit. The analysis should identify legal ownership, contractual rights, registration or protection, useful life, territory, exclusivity and restrictions. It should also examine who performs and controls development, enhancement, maintenance, protection and exploitation activities and who bears the associated risks.

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Legal ownership alone does not justify all intangible profit. A passive title holder without the people or capacity to control important risks may be entitled only to an appropriate funding return, depending on the facts.

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A robust royalty file should include the licence, technical or brand materials, proof of use, benefits or savings, alternative options, any royalty already embedded in goods or services and the pricing analysis. CUP analysis may be possible using internal or third-party licences, but differences in the bundle of rights, exclusivity, territory, stage of development, brand strength and profit potential must be addressed.

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Taxpayers should also coordinate transfer pricing with foreign contractor tax, withholding, treaty, customs, technology-transfer, intellectual-property and exchange-control requirements. Satisfying one regime does not automatically satisfy the others.

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5.3 Related-Party Loans, Guarantees and the Interest Limitation

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Financing creates two distinct transfer pricing questions:

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1. Is the interest rate, guarantee fee and other pricing arm’s length?

2. How much net interest expense is deductible under the 30% limitation?

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For pricing, the analysis should consider the borrower’s creditworthiness, currency, tenor, repayment profile, security, guarantees, subordination, purpose, market conditions and realistic alternatives. Relevant support may include bank offers, bond or loan comparables, credit-rating analysis, yield curves and guarantee-benefit calculations. Group membership may affect credit but does not automatically justify a fee.

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Decree 255 generally limits deductible net interest expense to 30% of tax EBITDA. Net interest is interest expense less interest income from deposits and lending. Tax EBITDA for this purpose is broadly net operating profit plus net interest expense plus depreciation, following the Appendix I computation.

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Restricted net interest may be carried forward for no more than five consecutive years beginning with the year after it arose, and may be used only to the extent the later period has available capacity under the 30% limit. The rule applies to an enterprise that has related-party transactions and is not confined to interest paid to related parties.

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The cap does not apply to qualifying credit institutions and insurance businesses or specified ODA, government concessional on-lending, national target programme and State social-welfare project financing. Decree 255 also preserves the remaining transitional treatment available under Article 3 of Decree 20 for qualifying historical restricted interest.

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The Appendix I interest schedule should reconcile to the general ledger, loan register, financial statements and tax computation. Businesses should track each vintage of restricted interest because the five-year periods expire separately.

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5.4 Tangible Goods, Manufacturing and Distribution

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Manufacturing and distribution arrangements should reflect the actual value chain. A routine contract manufacturer may earn a stable arm’s-length return if it performs limited functions, owns no unique intangibles and is insulated in practice from material market and inventory risks. That label is not credible if the Vietnamese entity makes key product decisions, owns valuable process know-how, bears capacity or warranty risk or conducts material local development.

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Similarly, a limited-risk distributor can still require a commercially realistic return, but the analysis must account for local marketing, inventory, credit, regulatory and warranty activities. Persistent losses by an entity described as routine are an obvious audit trigger. The taxpayer should identify whether the loss arose from start-up conditions, independent market factors, group pricing, excess capacity, one-off costs or unremunerated functions and support the duration and allocation of those costs.

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For commodity transactions, public exchange or quoted-price data may support CUP analysis, subject to adjustments for grade, quantity, delivery, freight, insurance, location, timing and contractual terms. Transfer pricing, customs value and import duty positions should be coordinated: a higher import price may reduce corporate income tax but increase customs duty, and inconsistent narratives invite challenge by both authorities.

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5.5 Permanent Establishments, Restructurings and Shared Resources

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Head-office and permanent-establishment dealings are related-party dealings under Decree 255. Income and expense attribution should follow the functions, assets and risks of the permanent establishment, applicable domestic law and the relevant treaty. Allocated head-office charges require the same benefit and evidence standards as other services.

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Business restructurings can transfer functions, customer relationships, workforce, inventory, contracts, risks or profit potential even if no single asset is formally sold. The analysis should identify the options realistically available to each party, whether an independent party would require compensation and how any transferred intangible or ongoing concern is valued.

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Shared assets, labour, capital and cost pools require a written scope, consistent allocation mechanics and reliable records. The accounting entry should be traceable from the group pool to the Vietnamese entity and then, where relevant, to the business line or incentivised project receiving the resource.

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6. Documentation and Disclosure Requirements

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6.1 Annual Related-Party Disclosure

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Appendix I to Decree 255 is filed with the annual corporate income tax finalisation return. For a calendar-year taxpayer, the finalisation return is generally due by the last day of the third month following year end; the exact due date should be confirmed under the tax administration rules for the taxpayer’s fiscal year and filing circumstances.

Appendix I covers:

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• each related party and the basis of the relationship;

• the applicable declaration or documentation exemption;

• categories and values of related-party sales and purchases;

• recorded and arm’s-length values and any upward adjustment;

• the pricing method used;

• business results segmented between related and independent dealings; and

• the net-interest limitation and carryforward computation.

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The disclosure should reconcile to the financial statements, corporate income tax return, trial balance, transaction listing, foreign contractor tax returns and relevant customs data. Differences in currency, gross-versus-net presentation, credit notes and year-end true-ups should be documented before filing.

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6.2 Local File and Master File

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Unless exempt, the taxpayer must prepare and retain:

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• the related-party relationship and transaction information in Appendix I;

• a Local File following Appendix II;

• a Master File following Appendix III; and

• the ultimate parent’s Country-by-Country Report where Article 19 and Appendix IV apply.

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The Local File should ordinarily contain:

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• legal and ownership structure and management organisation;

• the Vietnamese business, strategy, market and competitors;

• material related-party transaction flows and values;

• agreements, invoices and other source documents;

• transaction-by-transaction functional and risk analysis;

• selection of the tested party, method and profit-level indicator;

• internal comparable review or detailed external database search;

• comparable financial information for at least the required periods;

• comparability adjustments and the arm’s-length result;

• financial statements, segmental schedules and reconciliation; and

• explanations for prolonged losses, restructurings or significant changes.

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The Master File provides the wider group context: organisation, business lines and value chain, important intangibles, intercompany financing, consolidated financial and tax position and global transfer pricing policies. A generic global report should be checked against Appendix III and the Vietnamese facts. Inconsistencies between the Master File and Local File can be more damaging than a missing immaterial narrative.

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6.3 Timing, Production, Retention and Language

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The transfer pricing documentation must be prepared before the annual corporate income tax finalisation filing date. It is retained rather than routinely uploaded in full with the return, but must be ready for production.

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During a pre-audit consultation, the taxpayer generally has no more than 30 working days after receiving a written request to provide the documentation. A taxpayer with a valid reason may obtain one extension of no more than 15 working days. Other examination or tax administration requests may be governed by their own procedural deadline, so the written request should be reviewed immediately.

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Every data source used in the analysis should be identifiable. Where comparable information consists of financial or accounting data, the taxpayer must retain and be able to provide it electronically in spreadsheet format. A PDF report without the underlying search output and calculations is therefore insufficient.

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Annual returns and statutory forms are filed in Vietnamese. Decree 255 does not create a broad English-language safe harbour for the Local File. A prudent taxpayer should maintain a Vietnamese or filing-ready bilingual file and be able to translate foreign agreements, group reports and source materials under the general procedural rules. APA dossiers have express language rules under Circular 95.

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Records should be preserved for the full statutory tax and accounting retention periods and while a relevant audit, objection, MAP or litigation remains open. As a practical control, taxpayers should maintain a long-term archive of at least the contracts, filings, transfer pricing files, benchmark data, source calculations and evidence for each period rather than relying on staff mailboxes or database access that may expire.

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6.4 Country-by-Country Reporting

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A Vietnamese ultimate parent entity of a multinational group must file a CbCR under Appendix IV where the group’s consolidated global revenue in the immediately preceding fiscal year is equivalent to at least EUR 750 million.

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A Vietnamese constituent entity of a foreign-headed group at the same threshold may avoid local filing where the ultimate parent files in its residence jurisdiction and the report is exchanged automatically with Vietnam under an effective competent-authority agreement. Surrogate-parent filing can also satisfy the obligation if all statutory conditions are met.

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Local filing may arise where the ultimate parent jurisdiction has no CbCR filing requirement, has a relevant tax treaty or international agreement with Vietnam but no effective competent-authority arrangement by the filing deadline, or has a notified systemic exchange failure. If a group has multiple Vietnamese constituent entities, it can designate one to meet specified notification or filing obligations.

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Form 01/TB-BCLN identifies the reporting entity. From Decree 255’s effective date, the notification is generally filed once when the obligation first arises, no later than the ultimate parent’s fiscal year end. A change, including cessation of the obligation, must be notified within 90 days. The report is due no later than 12 months after the ultimate parent’s fiscal year end and is submitted through the tax administration information system in encrypted XML format.

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The tax authority may use CbCR for risk assessment and information exchange, but Decree 255 states that it is not to be used directly to make a transfer pricing adjustment or assessment.

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6.5 Consequences of Inadequate Documentation

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Documentation quality affects both audit defence and the authority’s ability to assess tax. The authority can determine prices, margins, profit allocation, taxable income or tax where the taxpayer fails to file Appendix I, files incomplete or inaccurate information, fails to provide material Local File or Master File information or supporting source data on time, uses false or unreliable comparables, relies on invalid data without traceable origin or applies an exemption incorrectly.

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A report assembled after an audit notice is also less persuasive where contemporaneous contracts, allocation schedules or service evidence do not exist. The statutory preparation deadline means that the taxpayer should be able to show the file and core analysis were completed before finalisation.

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7. Transfer Pricing Adjustments, Penalties and Dispute Resolution

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7.1 Taxpayer and Tax Authority Adjustments

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The taxpayer must make an adjustment where its price or result falls outside the applicable arm’s-length range. It may select the point that best reflects comparability, but the adjustment cannot reduce Vietnamese taxable income or tax payable. This restriction should be considered before booking a downward year-end true-up.

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The tax authority can assess a related-party price, margin, profit allocation, taxable income or tax when the taxpayer does not comply with the declaration, documentation, data or pricing rules. Where the standard range is used and an authority adjustment is required, the median is the statutory reference point.

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A Vietnamese primary adjustment may create economic double taxation if the counterparty jurisdiction does not grant a corresponding adjustment. The taxpayer should identify this issue early, examine the applicable treaty and protect MAP and domestic appeal deadlines.

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7.2 Common Forms of Adjustment

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Common audit outcomes include:

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• increasing the operating margin of a loss-making or low-margin Vietnamese manufacturer or distributor;

• disallowing all or part of management, technical or service fees for lack of benefit, delivery or appropriate allocation;

• removing shareholder, duplicate or unsupported costs from a service pool;

• reducing a royalty where the intangible, use, benefit or rate is not supported;

• adjusting interest or guarantee pricing and separately restricting net interest under the 30% cap;

• challenging a year-end true-up that lacks contractual or accounting support;

• reallocating income associated with local functions, risks or intangibles;

• denying deductions paid to a low- or no-tax entity that lacks relevant substance; and

• revising profit attribution to a permanent establishment or following a restructuring.

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The resulting corporate income tax can interact with foreign contractor tax, customs duty, VAT, treaty relief and accounting treatment. An agreed or assessed adjustment should therefore be reviewed across all affected taxes.

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7.3 Penalties and Late-Payment Interest

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Decree 255 does not create a single fixed “transfer pricing penalty.” General tax administration sanctions apply according to the conduct and tax effect.

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An inaccurate declaration that creates an underpayment can generally attract a penalty equal to 20% of the tax shortfall, together with the tax and late-payment interest. Conduct classified as tax evasion can attract a penalty from one to three times the evaded tax, depending on the circumstances, in addition to recovery of the tax and interest. Criminal exposure may arise in serious cases.

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Late-payment interest under the 2025 Law on Tax Administration is generally 0.03% per day on the unpaid amount. Separate administrative fines may apply to late returns, inaccurate or incomplete return information, missing appendices, delayed information and failure to comply with examination requirements.

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Classification matters. A transfer pricing adjustment is not automatically tax evasion, but weak or false records, concealed transactions or deliberate misstatements materially increase the risk. Voluntary correction before an examination begins may improve the procedural position, although tax, interest and applicable sanctions should be assessed under the current correction rules.

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7.4 Domestic Objection and Appeal

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A taxpayer can challenge a tax decision through Vietnam’s administrative complaint and court procedures. The applicable deadline can be short and should be confirmed from the decision and the current complaints legislation as soon as an assessment is received. A challenge should address both the law and the evidence: transaction delineation, comparable selection, data reliability, adjustments and arithmetic.

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The tax amount may remain payable while a complaint proceeds unless a competent authority grants suspension or other relief. Taxpayers should therefore consider cash flow, guarantees, late-payment exposure and collection risk alongside the technical defence.

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Domestic review and treaty MAP are separate. Starting MAP does not automatically extend a domestic complaint or court deadline, and pursuing a domestic remedy does not necessarily preserve a treaty deadline.

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7.5 Advance Pricing Agreements and Mutual Agreement Procedure

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Circular 95/2026/TT-BTC governs unilateral, bilateral and multilateral APAs. Pre-filing consultation is available but optional. Eligible transactions should already exist and continue into the proposed period, be capable of separate delineation and reliable benchmarking, not be under an active tax dispute and be conducted transparently without tax avoidance or treaty abuse.

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An APA application is prepared in Vietnamese. A bilateral or multilateral application also requires an English translation, and foreign-language original documents require the prescribed translations. A taxpayer may request an application period of up to five continuous tax years starting with the application year or the following year, but a concluded APA has a validity period of up to three tax years beginning in the conclusion year or the following year as agreed. An APA may be extended for up to three years; the extension dossier is due at least six months before expiry.

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A concluded APA binds the taxpayer and tax authority, subject to its terms and critical assumptions. The taxpayer must file annual compliance reports with its corporate income tax finalisation dossier and promptly report material changes.

MAP may be available where a Vietnamese adjustment produces taxation inconsistent with an applicable treaty. Circular 95 generally rejects a request filed more than three years, or two years where the treaty so provides, after the relevant tax notification. The treaty’s exact deadline controls. A transfer pricing MAP dossier includes the transfer pricing file and supporting assessment evidence.

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Circular 95 also allows refusal in specified circumstances, including where the applicant has not fulfilled the relevant tax decision obligations unless execution is suspended, or where an examination is still in progress and no official record has been issued. Early procedural advice is therefore important.

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8. Industries and Transactions with Higher Transfer Pricing Risk

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Transfer pricing risk depends more on facts than sector labels, but some Vietnamese industries have recurring exposure.

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8.1 Industries Commonly Exposed

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• Export manufacturing and processing. Electronics, textiles, footwear, furniture, automotive components and other foreign-invested manufacturers often have large product flows, contract manufacturing models, incentives and persistent-loss questions.

• Consumer goods and distribution. Import prices, local marketing, inventory risk, royalties and regional service charges can materially affect the Vietnamese margin.

• Technology, software and digital business. Valuable intangibles, R&D, platform economics, data, integrated operations and hard-to-observe transactions may make one-sided methods unreliable.

• Banking, insurance and finance. Intra-group funding, guarantees, treasury activity, regulatory capital and financial instruments require specialist comparability analysis even where the 30% interest cap exclusion applies.

• Real estate, infrastructure and energy. Long development periods, shareholder funding, guarantees, related-party construction or management services and project incentives create multiple tax interactions.

• Natural resources and commodities. Quoted prices may be available, but grade, location, freight, timing and contractual adjustments are critical.

• Pharmaceuticals and life sciences. Product intangibles, registration rights, technical services, marketing activity and royalties are frequent points of enquiry.

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8.2 Higher-Risk Transactions and Outcomes

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The following indicators commonly merit a deeper review:

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• repeated losses or very low margins in an entity described as routine or limited risk;

• profits that diverge sharply from function, headcount, assets or local market performance;

• large management or technical fees without transaction-level delivery evidence;

• royalties charged in addition to high-priced goods without analysis of overlap;

• payments to low- or no-tax entities with limited personnel or capability;

• significant related-party loans, guarantees, cash pools or expiring interest carryforwards;

• benchmark sets using broad regional companies without testing Vietnamese comparability;

• results outside the 35th-to-75th-percentile range near filing;

• year-end true-ups without a pre-existing agreement or clear invoice and tax treatment;

• business restructurings, closures or transfers of customers, functions, people or know-how;

• domestic transactions involving incentives, losses or different effective tax positions;

• inability to reconcile Appendix I to the ledger, customs data and tax returns; and

• CbCR or Master File allocations inconsistent with the Vietnamese Local File.

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9. Current Challenges and Emerging Trends

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9.1 First Compliance Cycle Under Decree 255

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The 2026 tax period is the first under Decree 255. Taxpayers must update related-party mapping, exemption tests, documentation templates, benchmark ranges and CbCR processes. Simply rolling forward a Decree 132 file risks using an outdated legal framework and missing the new EUR 750 million CbCR threshold, notification process, revised prescribed-profit exemption and data requirements.

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9.2 Substance and Evidence over Formal Documentation

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The new decree reinforces actual conduct and value creation. Audits are likely to focus on whether the people, decision-making, assets and risk control match the contract. Services, intangibles and financing are especially vulnerable when the provider or income recipient has limited capacity.

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9.3 More Data-Driven Enforcement

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Decree 255 provides for risk-based selection, pre-audit consultation, voluntary compliance support and inter-agency data sharing. The State Bank can provide foreign-loan amounts, rates, drawdowns, principal and interest schedules and repayments. Other ministries can provide technology transfer, intellectual property, commodity and sector information.

The tax authority may publish industry profit ratios by sector, location or taxpayer group as a compliance reference. Such indicators do not replace a transaction-specific analysis, but a large unexplained difference may influence risk selection and the questions asked in consultation or audit.

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9.4 Financing Governance

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The related-party financing test, arm’s-length pricing requirement and 30% interest cap operate together but answer different questions. Businesses increasingly need a single financing file covering related-party status, debt capacity, credit analysis, interest pricing, guarantee benefit, foreign loan registration, withholding and the Appendix I tax-EBITDA calculation.

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9.5 International Transparency and Dispute Resolution

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Vietnam’s CbCR rules now use the EUR 750 million international threshold and a more structured notification and exchange model. Circular 95 modernises MAP and APA procedures. These mechanisms increase transparency and can reduce uncertainty, but they also expose inconsistencies across the Local File, Master File, CbCR, treaty position and foreign counterparty documentation.

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10. Practical Recommendations

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10.1 Establish the Compliance Position Each Year

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At the start of finalisation, a taxpayer should:

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1. map all legal and de facto related parties under every Article 5 test;

2. extract gross transaction values by party and category;

3. test the domestic, small-taxpayer, APA and prescribed-profit exemptions separately;

4. assess CbCR notification and filing status independently;

5. calculate current and carried-forward net-interest capacity; and

6. record the conclusion and evidence, even where an exemption applies.

7. ​Ownership, management and financing should be monitored during the year because a relationship can arise before year end.

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10.2 Align Policy, Agreements and Conduct

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Intercompany agreements should be signed on time, identify the transaction and pricing mechanics, allocate functions and risks consistently with actual conduct and address year-end adjustments. They should also align with invoices, accounting, customs, foreign contractor tax, exchange-control and other local requirements.

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Interview the Vietnamese personnel who perform the activity. If their description differs from the agreement or group policy, correct the operating model or the documentation rather than ignoring the inconsistency.

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10.3 Build Transaction-Level Evidence

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For services, keep benefit and delivery evidence by service category. For royalties, retain proof of rights, use, value and DEMPE activity. For financing, retain credit, terms, alternatives, guarantees and market pricing. For tangible goods, keep product, volume, freight, market and contractual comparability data.

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Create the allocation schedules from source systems, preserve the cost-pool exclusions and lock the final spreadsheet used for invoicing. Evidence should show not only what was charged but why the Vietnamese taxpayer obtained value and why an independent party would pay.

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10.4 Monitor and Adjust Before Filing

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Review the tested result during the year and again after the accounts close. Explain market or operational variances while evidence is available. If a true-up is required, apply the contract, arm’s-length range, invoice, accounting and related tax consequences before filing. Remember that a taxpayer transfer pricing adjustment cannot reduce Vietnamese taxable income or tax.

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Refresh benchmarking when the business, transaction or market changes and update financial data annually. Preserve the original database output, rejection log and calculation workbook so the search can be reproduced after database access expires.

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10.5 Prepare for Consultation, Audit and Dispute

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Maintain an audit-ready package containing:

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• filed Appendix I and corporate income tax return;

• Local File, Master File and CbCR or exemption memorandum;

• legal agreements and invoices;

• transaction listings and financial reconciliation;

• benchmark source data and calculations in spreadsheet form;

• service, intangible and financing evidence;

• board and management records supporting actual decision-making;

• interest-cap schedule by carryforward year; and

• a response protocol assigning tax, finance, legal and operational owners.

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On receiving an information request, record the receipt date, deadline and scope immediately. Ask for the permitted extension before the original deadline where there is a valid reason. Responses should be consistent across documents and should explain the facts before defending the numerical method.

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Conclusion

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Vietnam’s transfer pricing regime is broad, detailed and increasingly data driven. From the 2026 corporate income tax period, Decree 255 requires taxpayers to revisit related-party classification, documentation exemptions, comparability, the statutory range, CbCR and the evidence supporting services, intangibles and financing.

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The strongest compliance position combines accurate annual disclosure, contemporaneous Local File and Master File work, reliable benchmark data, robust accounting reconciliation and evidence that the pricing follows actual value creation. Businesses that wait for an audit request may have only 30 working days to reconstruct several years of facts; those that build the evidence with the transaction are far better placed to defend the result and pursue treaty relief if double taxation arises.

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