Related party transaction strategy (GDLK) is no longer an option but has become a mandatory requirement for both FDI enterprises and domestic corporations. Based on the current legal framework as Decree 132/2020/ND-CP and Decree 20/2025/ND-CP, an effective transfer pricing strategy will help businesses ensure legal compliance, optimize capital structure, manage costs appropriately and minimize tax risks. This is also the key to improving financial reporting transparency, strengthening credibility with regulators, investors and strategic partners.
Affiliate Marketing Strategy Concept
Strategy affiliate transactions is a comprehensive management orientation that an enterprise builds to design, implement and control transactions arising between related parties, including parent companies - subsidiaries, branches, member units in the group or financial partners with control. Different from processing individual transactions, the related party transaction strategy is a long-term management system, ensuring that all transactions are priced transparently, in accordance with the law and optimize financial efficiency for the entire group.
Benefits of building an affiliate marketing strategy
Building a transfer pricing strategy is not only about legal compliance, but also brings many practical values to businesses. When implemented properly, this strategy becomes a comprehensive management tool, helping businesses both protect long-term interests and enhance their competitive position in the market. Specifically, businesses can see the following outstanding benefits:
- Transparency and legal compliance: Records, declarations and related party transaction contracts are standardized according to the arm's length principle.
- Legal tax optimization: Capital structure, service fees and profit allocation are designed reasonably, both legally and minimizing tax costs.
- Reduce financial and legal risks: avoid being charged back, administrative fines, or affecting audited financial statements.
- Strengthening reputation and competitiveness: Enterprises demonstrate transparency with shareholders, investors and strategic partners, while meeting governance requirements according to international standards.
The strategic role of related party transactions in corporate governance and increasing financial reporting transparency
A well-developed transfer pricing strategy goes beyond meeting tax obligations, and serves as an important governance tool across the entire corporate system.
Role in corporate governance
In multinational corporations, or businesses with many subsidiaries, the allocation of capital, profits and costs is often very complicated. Without a clear strategy, businesses are susceptible to transfer pricing risks, or unreasonable profit allocation. Related party transaction strategies help:
- Establish a transparent profit allocation mechanism, based on the functions, assets and risks of each member unit.
- Effectively manage internal transactions such as loans, guarantees, service fees, copyrights, etc. to avoid abuse or violations.
- Create a balance of interests among units in the group, contributing to stabilizing capital flows and promoting sustainable development.
Role in increasing transparency of financial reporting
Financial statements (FS) not only reflect business results, but also act as a “mirror” to demonstrate the level of transparency and reputation of the enterprise. A related party transaction strategy helps:
- Correctly record the economic nature of the transaction, in accordance with the arm's length principle.
- Avoid having expenses excluded or profits adjusted during tax audits.
- Build trust with shareholders, investors, banks and strategic partners when assessing the financial capacity of the enterprise.
- Support businesses in raising capital and expanding international cooperation through transparency and compliance with international standards.
To see the difference, let’s compare a business that has developed a related party transaction strategy with a business that has not yet implemented a related party transaction strategy with MAN – Master Accountant Network. This shows the important role of the related party transaction strategy in governance, financial transparency and risk reduction.
Board: Compare businesses with and without affiliate trading strategies.
| Criteria | Have an affiliate marketing strategy | No affiliate trading strategy |
| Compliance with the law | Declare and prepare full GDLK records according to Decree 132/2020/ND-CP and Decree 20/2025/ND-CP. | Missing or incorrect records can easily lead to tax assessment, collection and penalties by tax authorities. |
| Corporate governance | Transparent allocation of capital, profits and costs, supporting subsidiaries to operate effectively. | Unclear distribution, prone to internal disputes and financial imbalance. |
| Cost Management | Interest and service costs are monitored, accounted for transparently, and comply with the 30% EBITDA standard. | Risk of expenses being excluded during settlement, directly affecting profits. |
| Legal and tax risks | Low risk due to regular reporting and control mechanisms. | High risk of being prosecuted by tax inspectors, loss of business image and reputation. |
| Transparent financial reporting | The report reflects honestly, is audited and highly appreciated by investors. | On the contrary, if there is no related party transaction strategy, it will lead to a lack of transparency in financial statements. This will reduce the trust from shareholders to investors and partners. |
| Competitiveness and integration | Increase market reputation, facilitate capital mobilization and expand international cooperation. | Limited in raising capital, very difficult to expand cooperation with international partners. |
As can be seen from the comparison table, having a clear transfer pricing strategy not only helps businesses ensure compliance with tax laws, but also enhances their management capacity and reputation in the market. However, for this strategy to be truly effective, businesses need to focus on the core factors that determine success, from capital structure, transfer pricing management to transparent internal control mechanisms.
Core elements of affiliate marketing strategy
For an affiliate marketing strategy to be truly effective, businesses need to focus on four key elements, linked to legal requirements and international messaging.
Capital structure and interest expense
In internal loan or guarantee transactions, enterprises must strictly control the loan cost ratio not exceeding 30% EBITDA as prescribed in Decree 132/2020/ND-CP and updated by Decree 20/2025/ND-CP. This is a mechanism to prevent the situation of "thin capital", taking advantage of loan interest expenses to reduce taxable income. Therefore, the related party transaction strategy needs to establish a reasonable, transparent loan structure and the ability to balance long-term cash flow.
See details at: Interest expense is controlled
Transfer pricing management in internal services and royalties
One of the most sensitive aspects of a transfer pricing strategy is the pricing of internal services, royalties or group management fees. These are often difficult to determine their actual value and are easily suspected by tax authorities as profit shifting tools. Enterprises must demonstrate their necessity, economic value and apply the arm's length principle when determining the fee level.
Reasonable profit allocation
The transfer pricing strategy should provide a mechanism for allocating profits between related parties based on the functions, assets and risks of each entity. This often applies to pricing methods according to regulations such as: Comparable Independent Price (CUP), Net Profit Margin (TNMM), Profit Split. Choosing the right method not only helps to comply with the law, but also honestly reflects the nature of the transaction.
Specific details of each method: Affiliate Transactions Overview
Internal controls and data systems
A transfer pricing strategy is only effective when there is a transparent data system and tight internal controls. Enterprises need to ensure consistency between transfer pricing records (Local file, Master file, CbCR), HTKK declarations and financial statements (BCTC). Discrepancies in information between these reports are a common cause of risks of collection and penalties during tax audits.
Refer to the article for detailed analysis on how to declare related party transaction records on the HTKK declaration form: Here
Although a related party transaction strategy brings many practical benefits to businesses, the reality shows that many businesses still do not pay attention or implement it in a perfunctory manner. As a result, when lacking a systematic related party transaction strategy, businesses will easily face many risks in terms of tax, finance and especially law. So what risks can arise if businesses do not develop a related party transaction strategy?
The risks of lacking an affiliate marketing strategy
A business that does not build or implement an affiliate trading strategy will face many serious risks, directly affecting its business operations and reputation in the market.
Tax Risk
According to Decree 132/2020/ND-CP and the new update in Decree 20/2025/ND-CP, enterprises with related-party transactions are required to declare, prepare documents and determine prices according to market principles. Without a suitable strategy, enterprises are very susceptible to:
- Collect and impose administrative penalties due to false declaration or lack of transparency.
- Exclude reasonable expenses, typically interest expenses exceeding 30% EBITDA.
- Tax is assessed if the tax authority believes that the price, interest rate or transaction terms do not reflect fair market value.
Practical example: Statistics for the first 6 months of 2025 show that the entire Tax sector has inspected and examined 119 enterprises with related party transactions. Thereby, it has collected, refunded and fined 600 billion VND; reduced losses by 3,579 billion VND; reduced deductions by 3.2 billion VND and adjusted tax income up by 5,091 billion VND. Of which, inspections and examinations to re-determine market prices for related party transactions have collected 360 billion VND, reduced losses by 3,139 billion VND, and adjusted taxable income up by 4,957 billion VND.
Source: Vietnam Financial Newspaper
Legal risks
Lack of an intercompany transaction strategy means that it is difficult for businesses to demonstrate the legitimacy of internal transactions. This can lead to:
- Violation of regulations on administration, cost accounting and profit allocation.
- Failure to comply with OECD filing obligations (Local file, Master file, CbCR).
- Increased risk of legal disputes with tax authorities, shareholders or business partners.
Reputational risk
One of the most serious consequences of lacking an affiliate marketing strategy is that the business's reputation is affected:
- Financial statements are not transparent, audited with exception.
- The confidence of shareholders, investors and banks has declined.
- Difficulty in raising capital or expanding international cooperation.
Thus, the related party transaction strategy is not only a tax management tool, but also a "shield" to protect businesses from financial, legal and reputational risks.
Solution to build affiliate trading strategy
For a truly effective affiliate trading strategy, businesses do not just stop at filing required documents, but also need to synchronously deploy many management solutions. These solutions help businesses comply with the law, optimize capital flow and minimize risks.
Periodic compliance assessment
Enterprises need to periodically review their related party transaction records, including Local file, Master file and CbCR according to OECD guidelines and regulations in Decree 132/2020/ND-CP. Periodic assessment helps to detect early errors in declarations, ensuring consistency between related party transaction records and financial statements, thereby reducing the risk of tax imposition or collection.
Design of a cost-revenue management model
A transfer pricing strategy cannot be separated from a transparent cost and revenue allocation mechanism between related parties. Enterprises need to build a management model based on functions - assets - risks (FAR analysis), thereby clearly identifying which unit bears the costs and which unit enjoys the profits. This model both meets the market price principle (arm's length principle) and helps optimize the legal financial structure.
Application of technology in transaction data analysis
In the digital age, technology application is a key element of modern transfer pricing strategies. Enterprises can use tax management software, ERP systems or Big Data analysis tools to track, standardize and compare transfer pricing data. This not only increases transparency but also supports faster and more accurate decision making when tax authorities request information.
Signing APA for major transactions
For complex, high-value or frequent transactions (e.g. loans, royalties, internal services), businesses should consider signing an APA (Advance Pricing Agreement) with the tax authority. This is an important legal tool that helps businesses unify their pricing methods in advance, minimize the risk of future adjustments, and create long-term stability for their related party transaction strategy.
To firmly implement an affiliated transaction strategy, businesses cannot ignore the detailed instructions in Circular 45/2021/TT-BTC, a document specifically regulating the application of APA to businesses with affiliated transactions.
Refer to the full analysis article at: Circular 45/2021/TT-BTC
Conclude
Vietnam's economic market is increasingly developing, attracting foreign investors, followed by increasingly tightening tax policies, building a related party transaction strategy is no longer an option, but a mandatory requirement for all businesses that have internal transactions within the group or with related parties. From the practice of inspecting and collecting taxes up to thousands of billions of VND each year, it can be seen that the risk of lack of transparency in related party transactions is extremely large, both financially, legally and reputationally.
A professional affiliate trading strategy not only helps businesses fully comply with the provisions of Decree 132/2020/ND-CP and Decree 20/2025/ND-CP, but also creates advantages in corporate governance, optimizes capital structure, minimizes legal tax costs and enhances transparency of financial reporting. This is the foundation for businesses to maintain long-term stability, while creating trust with shareholders, investors and strategic partners.
In addition, the related party transaction strategy also acts as a risk management tool, helping businesses proactively prevent the risk of being excluded from interest expenses, tax assessments or administrative penalties. When properly implemented, this strategy is not only a compliance strategy, but also an important part of a comprehensive financial and business strategy.
At MAN – Master Accountant Network, we accompany businesses in building, reviewing and implementing transfer pricing strategies in accordance with the Vietnamese legal framework and international practices. With a team of experienced professionals in the field of tax and accounting, MAN – Master Accountant Network is committed to providing optimal, transparent and sustainable solutions, helping businesses to be both legally safe and enhance their competitive advantage. Please contact us immediately. MAN – Master Accountant Network for advice.
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