In the context of tax authorities strengthening controls on transfer pricing and deploying a big data-driven risk analysis system by 2026, compliance services... Decree 132/2020/ND-CP It has become a safe investment for all businesses with related-party transactions. In reality, even a small error in the documentation can lead to billions of dong in back taxes, the assessment of profits, and subjecting the business to regular inspections.
This article will help businesses gain a clear overview of risks, understand regulations correctly, and choose effective compliance solutions, thereby protecting cash flow, optimizing tax costs, and maintaining corporate reputation in an increasingly stringent legal environment.
What is a service that complies with Decree 132?
The service in compliance with Decree 132 is a service that assists businesses in preparing related-party transaction documents, filing tax returns, and proving transaction prices in accordance with legal regulations.
To understand why compliance services under Decree 132 are so urgent, we need to look at how the tax administration landscape is changing dramatically in 2026.
Current status of tax management and inspection of related-party transactions in 2026
2026 marks a turning point in tax administration in Vietnam with the comprehensive operation of the Automated Risk Management System. The Tax Authority has perfected its Big Data system, connecting with countries in the global tax information exchange network. The application of artificial intelligence (AI) allows for the automatic review of transaction price discrepancies in an instant.
Businesses often come under scrutiny if they have unusually low profit margins compared to the industry average or incur significant interest expenses from related parties. Many businesses, due to a lack of in-depth understanding of tax law, have inadvertently created fatal loopholes in their records. The consequence is being subject to back taxes on corporate income tax amounting to billions of dong and being publicly named. Therefore, seeking a professional service that complies with Decree 132 right from the beginning of the fiscal year is the safest solution.
However, before addressing the risks, businesses need to properly understand the legal nature of Decree 132/2020/ND-CP.
Legal overview of Decree 132/2020/ND-CP
Decree 132/2020/ND-CP is the highest legal document currently in effect regulating tax management for enterprises with related-party transactions. This decree is based on international standards on preventing base erosion and profit shifting (BEPS). Compliance services under Decree 132 will help businesses operate based on two principles:
- The arm's-length principle: Compare the transaction price of a business with the price of unrelated parties under equivalent conditions.
- Substance over form: Tax authorities have the right to reject formal contracts if the economic substance of the transaction is inconsistent, in order to prevent the transfer of profits abroad or to entities with low tax rates.
Identifying Related Parties: A Challenging Point for Businesses
Identifying the affiliated party is the first and most important step in complying with Decree 132. According to Article 5, common cases include:
- Ownership: One party directly/indirectly holds at least 25% of the owner's equity.
- Executive power: A party that directly or indirectly manages and controls senior personnel decisions or financial policies.
- Specific loan relationships (Point d, Clause 2): This is the biggest obstacle for Vietnamese businesses. If a business borrows from another entity (including banks) and that loan accounts for at least 25% of the owner's equity and over 50% of the total value of medium and long-term debts, then that lending entity is considered an affiliated party. Many businesses have failed at this point because they did not use the services compliant with Decree 132 to review these loan relationships.
These are the most common cases that businesses often encounter. Article 5 of Decree 132/2020/ND-CP stipulates 11 cases for determining related-party relationships. To understand the remaining cases as well as those exempt from preparing documentation, please refer to the relevant regulations.
Reference: No need to create a related-party transaction file.
Despite clear regulations, the practical implementation is a bottleneck that causes many businesses to fail when trying to implement them on their own.
The practical difficulties and obstacles that hinder businesses.
While Vietnam's tax policy is transparent, it is extremely complex technically. Businesses that try to implement it themselves often encounter obstacles:
Regulations on limiting interest expense (Clause 30% EBITDA)
Clause 3, Article 16 of Decree 132 stipulates that the total deductible interest expense shall not exceed 30% EBITDA. This regulation creates significant difficulties for businesses requiring large capital investments or production expansion. Without the support of compliance services under Decree 132, accountants often lack the knowledge to optimize capital structure, leading to tens of billions of dong in interest expenses being disallowed as deductible expenses, unjustly increasing the corporate income tax burden.
See details: How to calculate interest costs according to Decree 132
The difference between Accounting Standards and Tax Law
Many transactions are recognized as valid under Vietnamese Accounting Standards (VAS) but are not accepted under regulations on related-party transactions. This lack of consistency causes confusion for businesses when explaining these discrepancies. Consulting services for compliance with Decree 132 will help correct these discrepancies right from the financial statement preparation stage.
Challenges in finding comparative data (benchmarking)
To demonstrate that the transaction price is appropriate, businesses need data from comparable companies. However, free data sources are often not reliable enough. Only professional service providers compliant with Decree 132 possess international databases such as Orbis, Bloomberg, or Moody's to conduct convincing functional and risk analyses.
To comply properly, businesses are required to adopt one of the internationally standardized pricing methods.
Analysis of 5 pricing methods in services in compliance with Decree 132
When preparing the application, the service complying with Decree 132 will help businesses choose one of the following methods:
- The Independent Price Comparison (CUP) method: Directly compares product prices. This method is the most accurate but it is difficult to find a perfect match.
- Resale Price Method (RPM): Based on the gross profit margin of the trading business.
- Cost-plus method (CP method): This is commonly applied to manufacturing and processing businesses.
- Net Profit Margin Comparison Method (NPMR): This is the most common method in services complying with Decree 132, based on the profit margin on revenue or costs.
- Profit Sharing Model (PSM): Used for complex transactions where parties jointly contribute unique intangible assets.
Failure to adhere to these principles can lead to extremely serious financial and legal consequences.
Terrible tax risks due to a lack of understanding of Vietnamese laws.
The risks of not using services that comply with Decree 132 or of violating the regulations are enormous:
- Tax assessment: The tax authorities have the right to assess the profit margin if a company's application is rejected. This often results in the amount of tax payable increasing by 2-3 times.
- Tax arrears and late payment penalties: With a late payment penalty of 0.031 TP3T/day, after 3-5 years of audit, the penalty amount could be equivalent to the original tax amount.
- Reputation risk: Businesses classified as "High Risk" in terms of taxation face annual audits and inspections instead of every 3-5 years. Maintaining a consistent service that complies with Decree 132 helps businesses maintain their tax credit rating.
This is why businesses need a professional solution instead of handling risks themselves.
Comprehensive solutions from professional Decree 132 compliance services at MAN – Master Accountant Network
We provide a roadmap to help businesses safely navigate the complex web of tax regulations. Detailed service information:
- Prepare a 3-level portfolio: Including a Local File, a Global Corporate File (Master File), and a Country-by-Country Report of Profit and Loss (CbCR).
- Reviewing material transactions: Assessing the reasonableness of corporate management fees, royalties, and interest expenses.
- Tax Appendix Declaration: Ensure that the figures on the final tax return match the pricing documentation. This is a crucial step in the service of complying with Decree 132.
- Representing the tax authorities: MAN – Master Accountant Network directly participates in the explanation and dialogue process with the inspection team to defend the data.
See details: Related party transaction advisory services.
In-depth implementation process:
- Model exploration: Value chain analysis and transaction flows.
- Functional, Asset, and Risk Analysis (FAR Analysis): Identify the functions, assets, and risks of the related parties. Based on this, conduct in-depth analysis to determine which party bears more risk and allocate profits accordingly.
- Benchmarking: Using Big Data to filter out the most similar businesses.
- Reporting and optimal consulting: Providing recommendations for businesses to adjust transaction prices to a safe range. This is the core value of our service in compliance with Decree 132.
Service price list complies with Decree 132.
To ensure transparency, MAN would like to send your company the following service fee schedule in compliance with Decree 132:
| Service categories | Business Type/Size | Estimated fee (VNĐ/year) |
| Review and declare the Appendix | Revenue below 50 billion | 25,000,000 – 45,000,000 |
| Advanced Local File Creation | Manufacturing or processing businesses | 90,000,000 – 150,000,000 |
| Create Master File | Member of a multinational corporation | 110,000,000 – 200,000 |
| Search for comparative data (Benchmarking) | According to the specific requirements of each project and industry. | 40,000,000 – 70,000,000 |
| Complete package | Includes explanation for the inspection. | 250,000,000 – 450,000,000 |
Note: The price list above is for reference only. The service fee in compliance with Decree 132 will be finalized after a MAN expert reviews the actual case file.
Why choose MAN as your partner?
While the market offers many accounting firms, compliance with Decree 132 requires a combination of tax law knowledge, financial skills, and practical experience.
- Specialized expertise: MAN has a specialized team of affiliated traders who focus solely on transfer pricing, and do not offer a wide range of other services.
- Technology and Data: We are committed to using clean, copyrighted data, ensuring that applications are not rejected due to data errors.
- Preventive thinking: Our Decree 132 compliance service focuses on preventing risks before they occur, rather than just dealing with the consequences.
Conclusion and recommendations
Decree 132/2020/ND-CP is not only a compliance burden but also a measure of a company's financial health. Ignoring or superficially handling related-party transaction documentation is a risky move for the company's future. Investing in a reputable Decree 132 compliance service is the smartest investment decision to protect business achievements against rigorous tax audits in Vietnam.
Don't let small mistakes lead to billions of dong in losses. Contact MAN – Master Accountant Network today to receive a free risk assessment report!
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
- Email: man@man.net.vn
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 Services Complying with Decree 132
Any business that engages in transactions with related parties must comply with the regulations in Decree 132. Common cases include: parent-subsidiary companies, businesses with a common major shareholder, or businesses with borrowing relationships exceeding the limits stipulated in Article 5 of the decree.
Yes. If a business fails to prepare or prepares incomplete documentation of related-party transactions, the tax authorities have the right to determine the taxable price and profit. In addition, the business may be subject to back taxes on corporate income tax, administrative penalties, and late payment interest, significantly increasing its total financial obligations.
According to Decree 132, the total interest expense deductible for corporate income tax purposes must not exceed 30% EBITDA. Any expense exceeding this limit will not be considered a deductible expense for the current period but may be carried forward to subsequent years, subject to relevant legal conditions.
Local Files are crucial documents detailing related-party transactions in Vietnam. They include: company information, FAR analysis, pricing methodology, comparative data, and conclusions regarding fair pricing. This is a key document when explaining transactions to the tax authorities.
Businesses must prepare a record of related-party transactions annually and complete it before the deadline for filing the corporate income tax return. The record does not need to be submitted immediately but must be readily available when requested by the tax authorities, usually within 15 working days of receiving the inspection notice.
This service does not directly reduce the amount of tax payable, but it helps businesses optimize their transaction structure and ensure that expenses are legitimate and comply with regulations. As a result, businesses avoid disallowed expenses, minimize tax arrears, and maintain reasonable profit margins within safe market standards.Which businesses are required to comply with Decree 132?
Will I be penalized for not documenting related-party transactions?
How are the 30% EBITDA interest expense limits applied?
What does the Local File section in Decree 132 include?
When do businesses need to prepare and submit documents for Decree 132?
Does compliance services under Decree 132 help businesses reduce taxes?