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Helping you easily find everything you need to know about the rules and regulations regarding transfer pricing and Country by Country reporting for every country you do business with.
Global transfer pricing guide
Transfer pricing - Vietnam
01 Jan 20256 min read
This publication provides a high-level overview of Vietnam's transfer pricing rules and outlines who to contact for expert guidance in this area.
Contents
Introduction to transfer pricing in Vietnam
The prevailing Transfer pricing regulations in Vietnam is Decree No. 132/2020/ND-CP (“Decree 132/2020”) issued on 5 November 2020, to set out new rules on transfer pricing in Vietnam.“Decree 132/2020” replaced Decree No. 20/2017/ND-CP (“Decree 20”) issued in 2017. The Decree 132/2020 would apply from the financial year 2020 of taxpayer. In addition, Decree 20/2025 (“Decree 20/2025”) has been issued on 10 February 2025 to provide certain clarifications toward Decree 132/2020.
Decree 132/2020 deals with principles, methods, processes and procedures for determining legitimate prices under related-party transactions; obligations of taxpayer in declaration and determination of pricing under related-party transaction, tax declaration and payment; responsibilities of regulatory authorities for tax compliance administration, and audit of taxpayer engaged in transfer pricing.
The transfer pricing rules apply to Vietnamese taxpayers engaging in transfer pricing matter.
Taxpayers are required to prepare annual disclosure form and contemporaneous report at the time the related party transactions took place and prior to the annual Corporate Income Tax finalization date.
Transfer pricing Documentation report must be maintained and presented upon request from the tax authority. Submission deadline of Transfer pricing Documentations shall be subject to regulations prescribed in the Law on Inspection.
The Vietnamese Transfer pricing regulations provide a threshold for Transfer pricing filing simplification, in which qualified taxpayers exempted from the preparation of Transfer pricing Documentation report for the respective tax years, while requirement of Transfer pricing Form could also be minimized.
Multinational groups with headquarters in Vietnam and global consolidated revenue in the relevant tax period from VND 18,000 billion must prepare the Country-by-country profitability report and submit no later than 12 months from the financial year-end of Ultimate Parent.
Self-assessment regime is applied in Vietnam, whereas the burden of proof shall be the responsibility of the taxpayer.
The Vietnamese Transfer pricing regime is mostly aligned with the principles of Transfer Pricing guidelines and the Base Erosion and Profit Shifting (BEPS) action plan issued by Organization for Economic Co-operation and Development (OECD).
OECD Transfer pricing guideline and relevant documents might be used as a guidance document for referential purposes and has no legal implications.
The acceptable methodologies for determining arm’s-length pricing are Comparable Uncontrolled (CUP) Price, Profit Margin Methods (including Resale Price Method, Cost Plus Method and Transactional Net Marin Method) and Profit Split Method (PSM).
Decree 132/2020 requires the use of a method that is most likely to provide a reliable assessment and estimation of an arm’s length result. The most appropriate method is determined based on the nature of the transactions and information or data available for comparative analysis.
Vietnam has a self-assessment regime, where it is the responsibility of the taxpayer to ensure compliance position and provide sufficient compliant documents as mandated.
Under annual transfer pricing disclosure form, the taxpayer confirms the arm’s-length value of their transactions or otherwise needs to make a voluntary tax adjustment.
Transfer pricing documentation
Any Vietnamese taxpayers engaging in related party/controlled transactions are subject to declaration by preparing annual Transfer pricing Disclosure Forms and Transfer pricing Documentation reports.
Transfer pricing Disclosure Forms are required to be prepared and submitted together with the annual Corporate Income Tax return.
Transfer pricing Documentation reports are required to maintain at the taxpayer’s premise and submit to the tax authority for assessment purposes upon request. 3-tier-documentation is mandated in Vietnam and requires the maintenance of (i) Local Files, (ii) Master Files and (iii) a copy of Country-by-country profitability report. Submission deadlines for Transfer pricing Documentation reports have been mandated to be in line with Inspection Law in case of tax audit or within 30 working days upon request in other circumstances.
Qualified taxpayer is exempt from preparation of Transfer pricing Documentation report in case one of the following conditions is met:
Taxpayer only incur transactions with domestic related parties with same corporate tax rates and no tax incentive applies to all engaging parties.
Revenue of taxpayer under VND 50 billion and total value of related-party transactions under VND 30 billion.
Taxpayer concludes an Advance pricing Pricing Agreement (APA) and submits annual APA report(s) covering all relevant related-party transactions.
Revenue of taxpayer below VND 200 billion, performs simple/routine functions, and achieves the minimal of functional operating profitability (from 5% for distribution, from 10% for manufacturing and from 15% for toll-manufacturing).
The following penalties applicable to non-compliance:
Administrative penalty ranging from VND8 million to VND15 million per act-of-conduct will be applied for absence of compliant document or inaccurate declaration.
A penalty equal to 20% of the underpaid tax amount shall be imposed in case tax authorities perform tax adjustment.
Late payment interest at a rate of 0.03%/day on any outstanding tax obligation.
Comparability analysis and demonstration of arm’s length result
The principle of comparability analysis and the selection of transfer pricing methods follows the priority order in selecting comparable data as below:
Internal comparable data of taxpayer;
Comparable data residing within the taxpayer’s jurisdiction;
Comparable data of other jurisdictions with similar sectoral conditions and economic levels.
Practically, Transactional Net Margin Method (TNMM) may appear as the most common methods for assessment and audit purposes in Vietnam.
The commercial database ORBIS provided by Bureau van Djik is widely used among Transfer pricing practitioners and tax authorities.
Under TNMM a search for Vietnamese comparable companies shall be prioritized, followed by an external search for comparable companies overseas only if Vietnamese comparable companies are not sufficiently identified.
Decree 132/2020, the use of inter percentile from the 35th percentile to the 75th percentile is mandated. Median value is regulated as a basis for tax adjustment, if necessary.
When a taxpayer is found to not completely comply with the relevant decree requirements, the tax authority may use internal government databases (i.e., "secret comparable data") to alter transfer pricing results.
The interest deductibility is capped at 30% of EBITDA (total net operating profit before interest, tax, depreciation, and amortization). Any non-deductible interest due to exceeding such limitation will be carried over to fulfill the limitation of the upcoming 5 years.
Advance Pricing Agreements (APAs)
Advanced Pricing Agreements (APAs) are written agreements between a taxpayer and Ministry of Finance (GDT) to govern the appropriate transfer pricing policy for a forward-looking period.
Circular 45/2021/TT-BTC (Circular 45/2021) provides guidance toward the application of Advance Pricing Agreement (APA) mechanism. The APA duration is valid at maximum 3 years.
Taxpayers have the election to enter into unilateral, bilateral, or multilateral APAs with the tax authorities.
Decree 122/2025/ND-CP has been issued to authorize the Minister of the Ministry of Finance to review and approve the APA and Tax Department to provide consultation toward such matter.
Related developments
Not Applicable.
Digital / electronic services and goods provided to consumers by non-resident (overseas suppliers’) providers are subject to 10% Value Added Tax. There is no separate Transfer pricing impact on such digital transactions as long as they are at arm’s length.
In the recent years, transfer pricing has become a material risk factor in the annual tax risk evaluation and audit strategy of the Vietnamese tax authority.
Common transfer pricing risks include, but not limit to, validity of comparable data documented in Local File, fluctuations in profit margins over time, consecutive losses, high volume of related-party transactions, etc.
Intra group services such as intangibles (royalty) and management charges could also be considered high-risk factors.
In accurate legal basis (i.e. OECD-oriented ) not following local regulations will lead to rejection of Transfer pricing compliant documents as its entirety.
Contact us
For further information on transfer pricing in Vietnam please contact:
