Risks when establishing Master File Transfer pricing is becoming a major issue for many businesses with related-party transactions as Vietnamese tax authorities increasingly tighten transfer pricing audits according to the roadmap. Decree 132/2020/ND-CP, Decree 20/2025/ND-CP and the OECD's global trend of combating tax base erosion. Even a small discrepancy between the Master File and the Local File, inaccurate comparative data, or misrepresentation of the value chain can lead to businesses being assessed taxes, facing back taxes, and incurring penalties amounting to billions of dong. This article, from an expert's perspective, will analyze common risks when preparing Master Files in 2026, the reasons businesses often encounter them, and solutions to standardize related-party transaction records to minimize the risk of tax audits.
The alarming state of compliance with related-party transactions.
As the 2026 tax season approaches, the pressure on Chief Financial Officers (CFOs) and Chief Accountants at foreign-invested enterprises (FDI) is immense. Master Files, one of the three levels of Transfer Pricing Documentation, are often overlooked with the mindset that "the parent company will handle it." This very mindset creates unnecessary risks when preparing Master Files.
Most businesses today are making fundamental mistakes that lead to risks when creating Master Files:
- Using a rough translation: Simply translating from the parent company's documents without checking for compatibility with domestic legal regulations. This is the source of all risks when creating a Master File from a legal standpoint.
- Lack of coherence: The Master File presents a very broad picture, while the Local File presents a completely different operational reality in Vietnam. This inconsistency is a serious risk when creating a Master File.
- Using low-quality consulting services: In an effort to cut costs, many businesses seek out consulting firms that lack licenses and do not possess standardized databases, directly increasing the risks when creating a Master File for the company.
5 common risks businesses face when creating MasterFiles.
If not prepared by experienced professionals, the risks involved in creating a Master File can turn it into evidence against the business during transfer pricing audits. Below is a detailed analysis of the five core risks associated with creating a Master File.
Risk of data inconsistency
The Vietnamese tax authorities now possess robust cross-border data retrieval capabilities. A common risk when preparing a Master File is that the company's profile in Vietnam describes it as a "Limited Risk Manufacturer" while it actually conducts R&D. This discrepancy leads to data inaccuracies, resulting in the rejection of the entire application and subsequent tax assessment. This assessment is often based on the profit margins of "high-profit" businesses, causing significant financial losses due to unforeseen risks in Master File preparation. To minimize errors, businesses should consult with professional firms. Transfer pricing consulting services To get the most comprehensive and accurate overview.
Risks from intangible assets and value chains
In the Master File structure, the description of intangible assets is central. The risk arises when the corporation describes all surplus value as belonging to the parent company, while the Vietnamese unit contributes significantly to market development. Without clarifying the profit allocation mechanism (Value Chain Analysis), the enterprise is easily accused of transfer pricing, a typical Master File risk in the era of combating Base Erosion (BEPS). To avoid this risk, the DEMPE (Development, Enhancement, Maintenance, Protection, Exploitation) analysis must be presented extremely rigorously and convincingly.
Risks from benchmarking studies.
This is the most error-prone part and the source of many errors during the creation process. A standard Master File requires accurate comparison data. However, errors in creating a Master File arise when:
- Outdated data: Using data from 3-5 years ago poses a serious timeliness risk when creating a Master File.
- Geographic discrepancy: Using EU-based benchmark companies for Vietnamese businesses without adjusting for data similarity is a misrepresentation.
- Lack of a dedicated database: Using free data to create a Master File increases the risk of bias and makes the records more likely to be rejected.
Businesses in the southern region can search Full-service transfer pricing in Ho Chi Minh City To ensure access to the most accurate benchmarking data, in preparation for the upcoming accounting period.
Legal risks and deadlines for submitting documents.
According to regulations, businesses only have 15 working days to provide the Master File upon request. Late submission is a risk when creating the Master File, leading to administrative penalties and inclusion in the inspection and audit list. Risk management when creating the Master File involves managing time and the availability of the documentation.
Warning about unreliable consulting firms.
Many agencies offer low-cost advertising services but lack in-depth knowledge of the supply chain, leading to errors in the Master File preparation process due to "copy-paste" methods and outdated benchmarking data that is unsuitable for the industry in which the business operates. This is a risk stemming from human error and a lack of expertise, potentially causing businesses to lose billions of dong in back taxes and face tax assessments. Instead of taking risks with inexperienced agencies, businesses should consult the transfer pricing service price list of MAN – Master Accountant Network to make a worthwhile investment for financial security.
Risk management solutions when creating Master Files for businesses.
To address risks during the Master File creation process, businesses need a systematic approach. The process of managing risks and errors in Master File creation must be carried out regularly and professionally.
Conduct a comprehensive review to minimize risks.
Don't treat the Master File as a closed document. Businesses must take steps to reduce risks and errors:
- Interviewing the operations department: Understanding the reality to eliminate risks due to misdescribed functions.
- Cross-check: Ensure the Master File does not conflict with the Local File.
- Update the structure: Accurately reflect changes within the corporation to avoid the risks associated with creating an outdated Master File.
Invest in quality benchmarking.
Data is the lifeblood of the file. The solution to avoid risks and errors during the preparation process is to use a comparable firm with the highest degree of similarity in function, risk, and assets (FAR Ananalysis). Meticulous qualitative analysis is the only way to eliminate risks when preparing the Master File related to discrepancies in financial ratios. Collaborating with a reputable provider is essential. transfer pricing services This will help businesses access internationally licensed databases, thereby eliminating the risks associated with creating Master Files related to discrepancies in financial figures.
The master file must be designed to address questions about profit margins and interest expense (exceeding the 30% EBITDA threshold). A good master file strategy will turn potential risks into advantages that protect the business.
Reference: Deadline for submitting Related Party Transaction Documents.
Why is MAN – Master Accountant Network the optimal choice for overcoming errors and risks in the accounting process?
Given the complex risks involved in preparing related-party transaction documents, choosing a consulting firm with in-depth expertise and practical experience is crucial for businesses to protect themselves against tax audits. With a team of experts boasting over 30 years of experience and a system of internationally standardized data analysis, MAN – Master Accountant Network provides comprehensive solutions to help businesses review, standardize, and effectively control errors in their Master Files. The following factors explain why many FDI businesses choose MAN as their partner.
Our team specializes in transfer pricing and possesses in-depth knowledge of regulations in Vietnam and internationally.
At MAN, we bring together experts with over 15 years of practical experience. MAN understands the most common risks when preparing Master Files and how to thoroughly address them before the Tax Authority intervenes. In addition, our team is continuously updated on domestic and international tax policies related to related-party transactions. We research and provide the most optimal solutions to ensure the best interests of businesses.
International Standard Database
MAN – Master Accountant Network uses Bureau van Dijk (Orbis/TP Catalyst), the global gold standard. Owning a top-tier database helps businesses completely eliminate the risks associated with biased comparative data when creating Master Files.
Providing ongoing support and assistance to businesses in explaining matters to inspectors.
MAN accompanies businesses throughout the entire explanation process, helping to mitigate risks arising during audits when preparing Master Files. Client peace of mind is proof of MAN's successful risk and error control in Master File preparation. We ensure transparency and protect the interests of our businesses.
Optimizing tax structure and reducing risks when preparing MasterFile
MAN not only helps businesses prepare compliance documentation but also advises on transaction optimization. This is the most proactive way to prevent potential risks and avoidable errors from occurring during the Master File filing process, right from the business model establishment stage.
Conclude
In the context of increasing tax audits of related-party transactions, creating a Master File is not only a compliance requirement but also a crucial factor in protecting businesses from legal and financial risks. Small errors in data, value chain descriptions, or inconsistencies between records can lead to the risk of significant tax assessments and back taxes. Therefore, businesses need to proactively review and standardize their Master Files according to regulations and seek support from experts knowledgeable in transfer pricing to minimize risks, ensure compliance, and achieve sustainable development in an increasingly stringent tax environment.
Contact information MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- E-mail: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Answering questions about the risks of creating a Master File.
According to regulations on tax management for enterprises with related-party transactions, enterprises belonging to multinational corporations that have related-party transactions and are not exempt from preparing a valuation report must prepare a Master File and a Local File. The preparation of a Master File is usually required when the corporation's consolidated revenue exceeds the prescribed threshold and the enterprise in Vietnam is part of that corporation's supply chain structure.
The most common risk is inconsistency between the Master File and the Local File, particularly in the description of the business's functions, assets, and risks (FAR Analysis) in Vietnam. When tax authorities detect this discrepancy, the filing may be rejected, and the business risks having its tax assessment or taxable profit adjusted.
Yes. The Master File needs to be reviewed and updated annually to reflect changes in corporate structure, business model, value chain, or intangible assets. Using outdated, unupdated records can increase the risk of tax audits.
According to current regulations, businesses typically only have 15 working days to provide transfer pricing documentation when requested by the tax authorities. Therefore, businesses need to prepare the Master File in advance to avoid the risk of late submission and administrative penalties.
For businesses with complex related-party transaction structures, hiring a specialized transfer pricing consultant is an effective solution to ensure that documentation is properly prepared, comparative data is reliable, and risks during tax audits are minimized. Which businesses are required to create a Master File?
What are the biggest risks when creating a Master File?
Does MasterFile need to be updated annually?
What is the deadline for providing the Master File when requested by the tax authorities?
Should you hire a consulting firm to create your Master File?