Transfer Pricing in Vietnam

The legal framework

The OECD publishes no Transfer Pricing Country Profile for Viet Nam: the series covered 83 jurisdictions as at August 2026 and Viet Nam is not among them. There is no OECD scaffold to lean on and no substitute for the domestic instruments, which are dense and were rewritten in 2026.

Decree No. 255/2026/ND-CP, signed on 30 June 2026 and published in Official Gazette No. 410 of 18 July 2026, took effect on 1 July 2026 and applies from the 2026 corporate income tax period. Its 24 articles repeal Decree 132/2020/ND-CP and Decree 20/2025/ND-CP outright. Above it sits the Law on Tax Administration No. 108/2025/QH15 of 10 December 2025, in force from the same date, replacing Law 38/2019/QH14 and naming the fight against transfer pricing among its objectives. The Tax Department, renamed from the General Department of Taxation with effect from 1 March 2025, introduced the decree by Official Dispatch 4697/CT-CS of 9 July 2026, the authority's own reading and the first stop when an article number is contested.

Article 3 keeps the familiar formulation: the taxpayer must exclude the factors that reduce its tax liability because of the related-party relationship and declare on a footing equivalent to independent transactions under the same conditions. Substance over form is stated separately, at Article 6(1) of the decree and Article 6(4)(a) of Law 108/2025/QH15.

Article 5 retains the 25% direct or indirect ownership test at Article 5(2)(a) and the management and control tests. The thresholds for debt are easily conflated and should not be. Lending or a guarantee between enterprises creates a relationship only where the amount is at least 25% of the borrower's owner's contributed capital and more than 50% of its total medium and long-term debt (Article 5(2)(d)); the 10% figure belongs to a different limb entirely, applying only to borrowing or lending with an individual who manages or controls the enterprise, or a relative listed in Article 5(2)(g) (Article 5(2)(l)). Neither that limb nor the 25% in-period capital transfer test is a 2026 innovation: both are carried over word for word from Decree 132/2020, Decree 255 adding only the lending and borrowing of assets. The genuinely new limb is the carve-out at Article 5(2)(d.3) for creditors and guarantors that are wholly state-owned debt-trading and debt-resolution organisations. There is no turnover entry threshold: one qualifying relationship is enough. Vietnam is not an OECD member, so the Guidelines are reference material with no binding domestic force, though the regime is modelled on them.

Methods, comparables and benchmarking

Articles 6 to 15, which make up Chapter II, prescribe three method families mapping onto the OECD set: comparison of independent transaction prices; comparison of profit margins, being resale price, cost plus and net margin comparison; and profit split. Article 16 is not part of that scheme — it opens Chapter III and deals with deductible costs for enterprises with related-party transactions, including the 30% EBITDA interest cap. The most appropriate method turns on the nature of the transaction and the reliability of available data. In practice that almost always means TNMM with the Vietnamese entity as tested party: the less complex party and the only one with reliable local accounts.

The arm's length range is the 35th to 75th percentile, narrower than the conventional interquartile range, so a result comfortably inside a 25th to 75th range may still fall outside the Vietnamese one. What happens next depends on who is acting. Where the taxpayer's own result falls outside the range, Article 8(2)(b) requires self-adjustment to the value within the standard range reflecting the highest degree of comparability with the controlled transaction — not necessarily the median — and the adjustment must not reduce taxable income or tax payable. The median belongs to Article 8(2)(c) and applies where the tax authority adjusts or makes a deemed assessment. It is the authority's instrument, not the general rule, and that is precisely why an unremedied out-of-range result is expensive: self-correction lands at the nearest defensible point, an audit lands at the 50th percentile.

Article 17 is the significant 2026 change. For the first time the decree ranks data sources at Article 17(3): publicly available official information first, including exchange data and the National Database newly formalised at Article 17(1)(d); commercial databases second; the tax administration's own databases third. Separately, Article 21(10)(b), in the article on the tax authority's responsibilities and powers, lets the Tax Department publish industry profit indicators by sector, geographic area or taxpayer group. The article frames this as support for taxpayers rather than a binding standard: a published indicator is not a safe harbour, but it is a benchmark the taxpayer must argue past if its return sits below it. Article 9 permits widening the search geographically and temporally where a specialised transaction lacks sufficient domestic comparables, but the temporal extension is capped at one prior financial year. A regional study imported unchanged, with no documented Vietnamese search first, is the commonest structural weakness in a Local File.

Documentation: what the Tax Department expects

Vietnam operates the full BEPS Action 13 three-tier model, Local File, Master File and CbC Report, alongside a mandatory annual disclosure. Article 18(2)(c) requires that disclosure — Appendices I, II and III to Decree 255, not Appendix I alone — to be filed electronically with the corporate income tax finalisation return, no later than the last day of the third month after year end, 31 March for calendar-year taxpayers. Appendix I runs to four sections: related parties; the exemption cases relied on; the information determining related-party transaction prices; and business results after applying those prices. APA status is not a section of its own but a column within Section III and a yes/no box in Section IV. Note that Article 12(8) of Law 108/2025 delegates the deadline itself to the Government rather than fixing ninety days in the statute.

The Local File and Master File are not filed. Article 18(3) requires them to be in place before the annual corporate income tax finalisation declaration, and Article 18(4) requires production within 30 working days of a written request, extendable once by up to 15 working days, with the request tied to the pre-inspection consultation under Article 21. Those are working days on the face of the decree, not calendar days. Documentation must be in Vietnamese; an English-only Master File does not discharge the obligation.

Article 20's exemptions repay careful reading. Full relief from declaration and documentation applies only where every related party is a Vietnamese corporate income taxpayer on the same rate with no incentive, a test the tiered rates in the new CIT Law can quietly break. Documentation-only relief follows from revenue below VND 50 billion with related-party transactions below VND 30 billion; from an APA covering the transactions; or from revenue below VND 500 billion where there is no intangible-related income or expense and net operating margin meets the sector floor of 5% for distribution, 10% for manufacturing or 15% for toll processing. That last limb is up from VND 200 billion and the old simple-functions condition has gone, but it is a trap dressed as a relief: relying on it commits the taxpayer to declaring the floor margin whatever the year produced.

Audits, penalties and the enforcement climate

Enforcement is active and measured. In the first half of 2025 the Tax Department examined 119 enterprises with related-party transactions, producing roughly VND 600 billion in additional tax and penalties, VND 3.579 trillion of loss reductions and VND 5.091 trillion of upward income adjustments, transfer pricing accounting for around 60% of the total. The triggers are predictable: consecutive-year losses in foreign-invested enterprises, management fees, royalties and technical service charges paid abroad, related-party financing against the 30% EBITDA interest cap in Article 16, and unexplained margin volatility.

Penalties sit outside the transfer pricing decree, in Decree 125/2020/ND-CP as amended by Decree 310/2025 and Decree 291/2026. An adjustment producing a shortfall attracts 20% of the understated tax plus late payment interest at 0.03% per day. There is no uplifted transfer pricing rate and no documentation-based reduction. Appendix filing failures draw roughly VND 8 to 15 million per act, and Decree 291/2026 adds a new penalty of VND 10 to 100 million for failing to supply information requested for international exchange.

The real sanction is structural. If the taxpayer misdeclares Appendix I, cannot supply comparability data, or misses the production window, the authority may fix the arm's length price from its own databases and adjust to the median under Article 8(2)(c), with penalty and interest following; Decree 255 expressly extends that power to incorrect Appendix I declarations. Contemporaneous Vietnamese-language documentation is the only defence on offer.

Coca-Cola Beverages Vietnam shows where this ends. After an audit covering 2007 to 2015 the company was assessed over VND 821.4 billion in tax, penalties and interest and had declared losses cut by more than VND 762 billion, on a finding that concentrate bought from group companies was not arm's length. The Ho Chi Minh City People's Court dismissed the challenge on 27 November 2025.

Dispute resolution and advance certainty

Circular 95/2026/TT-BTC, effective 1 July 2026, consolidates treaty, MAP and APA guidance into a single 84-article instrument replacing Circular 205/2013 and Circular 45/2021. MAP sits at Article 54 and Articles 58 to 65: application on Form 01/DTA-MAP, generally within three years of the first notification of the taxing action, or two where the treaty so provides. Article 58 lists the grounds for refusal — the request falls outside Vietnam's jurisdiction, the time bar has passed, tax obligations are outstanding, the applicant or a related party is under examination with no formal examination minutes drawn, the arrangement abuses the treaty, or the tax office finds the liability treaty-conforming. Electronic submission is now permitted. The network is wide: Vietnam has signed treaties with 81 countries, of which 75 are notified as covered agreements under the Multilateral Instrument, in force for Vietnam since 1 September 2023.

APAs are available unilaterally, bilaterally and multilaterally, the three forms listed at Article 68. Article 66 sets out who may apply and Article 67 which transactions may be covered: real and continuing transactions, sufficient comparable data, no live dispute and no avoidance purpose. The machinery runs across Articles 66 to 83 — application on Form 01/APA-ĐN, review, negotiation and execution, with pre-filing consultation optional. A taxpayer may request up to five tax years of cover but the executed agreement is capped at three (Article 83), renewable for three more where critical assumptions hold, on an application filed at least six months before expiry (Article 78); revocation for misrepresentation is retroactive (Article 81).

The signing question is settled, and not as earlier guidance had it. Since 1 July 2026 the Tax Department itself, acting under the Minister of Finance's delegation, is Vietnam's competent authority for MAP and APA (Articles 3(5) and 6(1)(a.2)), and Article 69(1)(a) gives it the lead on receiving, analysing, negotiating, signing, amending, extending and revoking bilateral and multilateral APAs, with the Ministry consulted only on the negotiation plan in complex or multi-jurisdiction cases. The step under Decree 122/2025/ND-CP of putting the draft before the Minister to sign has gone, as had the earlier referral to the Government and Prime Minister; Decree 122/2025 in any event operated by reference to provisions of Decree 126/2020 under the now-repealed 2019 Law on Tax Administration. The candid position is that the programme, open since 2013, had concluded no APA with a foreign jurisdiction: the procedural obstacles are gone, but the result is still unproven.

Domestically, a complaint goes to the issuing tax office within 90 days, then to the superior office or to the administrative court, which may also be approached directly. Assessed tax remains payable while the challenge runs.

Pillar Two and what changes in 2026

Vietnam has legislated the global minimum tax. Resolution 107/2023/QH15 applies a top-up tax for fiscal years beginning on or after 1 January 2024; Decree 236/2025/ND-CP of 29 August 2025 implements it from 15 October 2025, with procedures in Decision 3563/QD-BTC. Vietnam has adopted the QDMTT and the income inclusion rule but not the UTPR. Transitional relief removes penalties for late or incorrect filing for fiscal years beginning before 31 December 2026 and ending before 30 June 2028: a window, not an exemption. The transfer pricing consequence is economic rather than technical: incentives were long the reason profit sat in Vietnam, and QDMTT now recovers the difference up to 15%, changing what a Vietnamese margin is worth without changing how it is tested.

Two further 2026 items reshape the file. CbC reporting moves to the EUR 750 million consolidated revenue threshold, replacing the VND 18 trillion domestic figure, filed on Appendix IV in XML within 12 months of the parent's year end, with a new standalone notification due by that year end. And CIT Law 67/2025/QH15, effective 1 October 2025, adds 15% and 17% tiers below the 20% standard rate, which can defeat the same-rate condition in the domestic exemption. On Amount B, Viet Nam appears on the OECD's June 2024 covered-jurisdictions list but has enacted nothing: Decree 255 contains no Amount B safe harbour.

How practitioners should respond

Re-paper first, but re-paper accurately. Every policy document, benchmarking study and intercompany agreement citing Decree 132/2020 needs re-citing to Decree 255/2026 from the 2026 period, and the exemption analysis needs redoing because the thresholds moved. Resist the temptation to treat the related-party tests as rewritten: most of Article 5 is Decree 132 carried across, and the drafting error to avoid is reading the 10% individual-lending threshold as a general debt test. Several major professional guides still described Decree 132 as current in August 2026.

Benchmark locally and early. Under the Article 17(3) hierarchy a study that opens with a regional comparable set opens in the wrong place. Document the internal search, then the Vietnamese search, then the reasons for widening, and hold the temporal extension to one year. Check any published Article 21(10)(b) industry indicator for the sector before filing, because a return below it invites the question.

Treat contemporaneity as a hard date. The file must exist by the corporate income tax finalisation deadline, in Vietnamese, with the functional analysis and method justification complete. Thirty working days from a request, extendable by fifteen, is enough time to hand over a finished file and nowhere near enough to build one.

Price the alternatives. Where a group has recurring losses, material service or royalty flows, or financing near the 30% EBITDA cap, the choice is between a defensible file and an APA. The procedural bottleneck has gone — Cục Thuế now negotiates and signs bilateral and multilateral APAs itself — but the programme has still never concluded one with a foreign jurisdiction, so treat it as untested rather than blocked. One caution on sources: the gazetted text of Decree 255 is available only as a gated download, so article-level mapping below the level of Dispatch 4697/CT-CS rests on practitioner reconstruction, and several early practitioner notes carry article numbers that do not survive checking. Verify against the gazette before citing an article number in correspondence.