The current state of transfer pricing in Vietnam

Transfer pricing is no longer a foreign concept in the financial world, but by 2026, its form has completely changed. With the explosion of smart supply chains and cross-border business models, the reality of transfer pricing in Vietnam is becoming more complex and sophisticated than ever before. Transfer pricing is no longer simply about adjusting the prices of goods bought and sold, but has transformed into multi-layered financial structures, overlapping loan flows, and intellectual property schemes aimed at minimizing corporate income tax obligations in Vietnam.

This article analyzes the current state of transfer pricing in Vietnam based on actual data from regulatory agencies, identifies the latest "loopholes," and outlines a roadmap for tightening management through modern legal frameworks such as: Decree 20/2025/ND-CP and global revenue erosion programs (BEPS).

The current state of transfer pricing in Vietnam during the period 2025-2026

By the end of 2025, tax audits and inspections aimed at combating tax evasion by related-party transactions had achieved groundbreaking results in both scale and effectiveness. However, thematic reports also revealed the enormous scale of profits being abnormally transferred out of the country, reflecting that transfer pricing in Vietnam remains a major challenge.

Actual figures from the tax authorities in 2025

Based on the summary report of the General Department of Taxation and tax risk control units in the first half of 2025, the current state of transfer pricing in Vietnam is clearly illustrated through quantitative indicators:

• High-risk audit scope: The tax authorities conducted in-depth audits at 119 key businesses showing signs of high risk related-party transactions (RPTs). These were typically entities reporting continuous losses or with profit margins significantly lower than the industry average.
• Results of financial violation handling: The total amount of back taxes and administrative penalties reached 600 billion VND. Losses carried forward (a form of balance sheet cleaning to avoid future taxes) were reduced by 3,579 billion VND. Taxable income was adjusted upwards by a total of 5,091 billion VND.
• Contribution to tax management: Inspections related to transfer pricing currently account for up to 60% of the total tax adjustments in FDI enterprises. This confirms that transfer pricing in Vietnam is the most critical area in protecting national budget revenue.

References: Compiled from the Summary Report on Inspection and Auditing Activities of the General Department of Taxation – Ministry of Finance.

The "Real Profit - Fake Loss" Paradox – The Core Nature of Transfer Pricing in Vietnam

A striking feature when examining the reality of transfer pricing in Vietnam is the persistent paradox that has existed for decades. Currently, more than 501 FDI enterprises report losses, with many experiencing consecutive losses for 5-10 years, yet they continue to undertake expansion projects, increase capital, and attract large numbers of workers. According to economic experts, without internal capital support or the use of profit-shifting techniques, a normal enterprise could not sustain operations while simultaneously expanding its scale. This is the clearest indication that transfer pricing in Vietnam is being abused to evade social contribution obligations.

Identifying sophisticated and modern transfer pricing methods.

To gain a deeper understanding of the current state of transfer pricing in Vietnam, join MAN – Master Accountant Network in exploring and analyzing the technical methods commonly used by businesses. Currently, the focus has shifted from tangible assets to intangible assets and debt structures.

Transfer pricing through intangible assets and royalties.

This is considered the "hot spot" and the most difficult to control in the current transfer pricing situation in Vietnam. Multinational corporations often impose extremely high royalty fees, brand usage fees, or technical management fees on their local branches.

• Method: Because intangible assets (software, proprietary formulas, trademarks) are extremely difficult to value at free market prices, businesses often inflate these costs to the point of completely eliminating any profit generated in Vietnam.
• Impact: The flow of money is "legitimized" as expenses to be transferred to countries with lower tax rates (tax havens), making transfer pricing in Vietnam a serious problem for consumer goods and high-tech industries.

Thin Capitalization Strategy and Interest Costs

Taking advantage of the fact that its branches in Vietnam need large amounts of capital for infrastructure investment, the parent company provides loans at high interest rates or maintains a capital structure in which debt accounts for an overwhelming proportion of equity. Although Decree 132 and now Decree 20/2025/ND-CP have tightened the ceiling on interest expense at 30% of EBITDA, transfer pricing in Vietnam still shows many variations through hybrid debt instruments or complex debt swap structures to circumvent regulations on the expense ceiling.

Transfer pricing in the digital economy and cross-border services.

The rise of platform-based business models has created a new layer in transfer pricing practices in Vietnam. Multinational technology companies generate revenue from Vietnamese users but account for profits in global data centers. Determining the value created for fair tax allocation is a major challenge, highlighting how transfer pricing in Vietnam is linked to loopholes in international digital tax laws.

Reference: Transfer pricing advisory services.

Typical cases: Evidence of the reality of transfer pricing in Vietnam.

To vividly illustrate the reality of transfer pricing in Vietnam, it is necessary to look back at classic case precedents uncovered by tax authorities, citing data from CafeF and Vietnam Investment Review:

• The Coca-Cola Vietnam incident: A prime example of transfer pricing in Vietnam is a case where a company reported continuous losses from 1994 to 2012 despite strong sales growth. Following an audit, tax authorities determined that the price of specialized raw materials imported from the parent company was unusually high. As a result, the company was ordered to pay back taxes and fines totaling over 821 billion VND, and was forced to adjust its reported losses downward by thousands of billions of VND.
• The Keangnam Vina case: Regarding Hanoi's tallest building, the company used EPC contracts and management consulting fees from its South Korean parent company that lacked economic justification. This demonstrates the reality of transfer pricing in Vietnam through the artificial inflation of capital construction investment values to increase depreciation costs later on. The total adjusted value after the inspection amounted to 1,220 billion VND.

• The Metro Cash & Carry incident: The company reported accumulated losses of VND 1.657 trillion after 12 years of operation. Tax authorities determined that technical support fees and franchise fees paid to the parent company in Germany were unreasonable. This case reflects the reality of transfer pricing in Vietnam, which often occurs in retail corporations with complex global supply networks.

Why is the issue of transfer pricing in Vietnam still so difficult to resolve completely?

From the perspective of related-party transaction experts, addressing the issue of transfer pricing in Vietnam faces systemic challenges that cannot be resolved overnight:

• Confidentiality of multinational corporations: Transfer pricing structures are often designed by top financial minds at headquarters abroad, making it difficult for branches in Vietnam to have complete data to explain during audits.
• Lack of local verification databases: Currently, Vietnam still lacks a sufficiently large and publicly available national trade data system that allows businesses to independently verify their prices, leading to sometimes subjective price determination by tax authorities.
• Impact on investment attraction: An overly strict policy regarding transfer pricing in Vietnam, if not enforced fairly, could create apprehension among legitimate FDI investors and reduce the competitiveness of the business environment.

Compliance solutions and roadmaps for businesses.

Given the strict regulations on transfer pricing in Vietnam, businesses need to take the following steps to ensure financial security:

• Building a transfer pricing dossier: This includes the national dossier, the corporate dossier, and the country-by-country profit report. Early preparation helps businesses proactively explain the transfer pricing situation in Vietnam to the inspection team. If difficulties or obstacles arise in finding comparative data or selecting appropriate pricing methods, businesses can proactively prepare. hire someone to prepare related party transaction documents. Having an experienced unit handle the process will ensure that the application is always convincing.
• Conduct periodic reviews: Self-assess financial indicators such as operating profit margin and interest expense/EBITDA ratio to ensure you are not in a high-risk category subject to tax audits.
• Consult with independent experts: For complex transactions involving intangible assets, consultation is recommended. related party transaction advisory services Reputation will help businesses set prices that are consistent with market practices, minimizing suspicion about the reality of transfer pricing in Vietnam.

Conclude

In summary, transfer pricing in Vietnam is no longer a simple practice, but has become a high-tech battle of wits between businesses and regulatory agencies. The government's continuous improvement of the legal framework and application of digital technology in tax management is evidence of its determination to create a healthy business environment.

A proper and thorough understanding of the transfer pricing landscape in Vietnam not only helps businesses avoid significant legal risks but also demonstrates a commitment to ethical business practices. Transparency in related-party transactions is key for multinational corporations to assert their true value in the Vietnamese market.

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Content is moderated by: Mr. Le Hoang Tuyen – Founder & CEO of Man, CPA Vietnam Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.

Frequently Asked Questions about Transfer Pricing in Vietnam