Risk traps from the global MasterFile data security regulation.

Master File Transfer pricing is no longer simply a matter of declaring transfer pricing; it has become a "hot spot" for the intersection between international tax compliance and global data security regulations in 2025. As tax authorities increase cross-border information exchange, each Master File not only reflects the business strategy, intangible assets, and value chain of a multinational corporation, but also contains sensitive data that can lead to serious legal risks if mishandled. From the perspective of tax and data management experts, this article will guide businesses on how to create and manage a Global Master File that is both compliant with BEPS standards and adheres to global data security regulations, helping to minimize the risk of audits, penalties, and reputational damage in an increasingly stringent environment.

What is a Master File? The tax "passport" of a multinational corporation.

According to the definition of the Organization for Economic Cooperation and Development (OECD) in the Framework for Action on Base Erosion and Profit Shifting (BEPS), specifically Action 13, the Master File is part of a three-tiered approach to transfer pricing.

While the Local File focuses on detailed transactions in each country, the Master File serves as a "big picture," providing tax authorities with an overall view of the corporation's global business operations.

The required structure of a standard Global Profile:

• Organizational structure: A diagram showing the legal ownership and geographical location of the entities.
• Value chain: A detailed description of the main product/service lines that account for more than 51% of the group's revenue.
• Intangible assets: This is the most important section, outlining the DEMPE strategy (Develop, Improve, Maintain, Protect, and Exploit intangible assets).
• Financial operations: Methods of raising capital and internal loan agreements.
• Financial statements and tax position: Advance tax agreements (APAs) and consolidated business results.

Creating a Master File helps businesses demonstrate transparency, but it also contains some of a company's most confidential information.

The intersection between MasterFile and global data security regulations

Why do we need to mention global data protection regulations when discussing taxes? The answer lies in the nature of the information stored. The Master File contains personal information of beneficial owners (UBOs), proprietary intellectual property strategies, and compensation data of key personnel.

The legal frameworks that have a direct impact:

• GDPR (General Data Protection Regulation): This European Union regulation requires corporations to protect personal data, even when that data is included in tax reports submitted to authorities. Transferring Master File data from a branch in Germany to the parent company in another country must comply with cross-border data transfer rules.
• Decree 13/2023/ND-CP (Vietnam): In Vietnam, the processing of personal data in related-party transaction records is now governed by the Decree on Personal Data Protection. Businesses need to assess whether disclosing the identities of executives in Master Files requires their consent.
• CCPA/CPRA (USA): States like California set high standards for privacy, influencing how American corporations aggregate global data.

The conflict between the obligation to "provide" information to the tax authorities and the obligation to "keep confidential" information for individuals or businesses creates a double risk: the potential for tax penalties (transfer pricing penalties) and the risk of lawsuits for privacy violations.

Global data privacy regulations in reporting by 2025

From 2025 onwards, businesses can no longer continue the lax practice of "copy-pasting" data. Modern tax administration requires the application of the principle of "Security from the design stage."

New technical and legal requirements:

• Encryption and Access Control: Global records are often stored in digital format (such as Excel). Global data security regulations require these files to be encrypted at a high level. Only authorized personnel (Tax Director, Compliance Officer) are allowed access.
• Retention and Destruction Periods: Tax laws typically require records to be retained for 10 years for audit purposes. However, data protection laws require "data minimization," meaning the deletion of personal information as soon as the processing purpose is fulfilled. Businesses need to establish a flexible retention policy to meet both requirements.
• Cloud Security: When Master File data is synchronized globally, the country where the server is located determines the applicable security regulations. Large corporations are shifting to cloud solutions with international security certifications (ISO 27001, SOC2).

Given the increasingly stringent requirements for encryption, access control, storage, and cross-border data transfer, simply understanding the regulations is insufficient. The key question facing businesses in 2025 is: "How can we implement a Master File that meets tax standards while fully complying with global data security regulations in our operations?" This is precisely why businesses need a standardized, systematic, and feasible implementation guide, rather than reactive solutions.

Data security implementation guidelines

Based on our experience advising multinational corporations, MAN – Master Accountant Network proposes a 5-step checklist to ensure your company's global profile is both tax-compliant and legally compliant with privacy laws:

• Data Audit: Identify which parts of the Master File contain “personal data” or “sensitive business secrets”.
• Privacy Impact Assessment (DPIA): Before submitting your Master File to a tax authority in a country with high privacy risks, conduct a privacy impact assessment.
• Internal Data Sharing Agreement (IGSA): Entities within the corporation must sign strict confidentiality agreements before exchanging information to create a Master File.
• Implement security technology: Use tax management platforms that integrate file security features. Avoid sending Master Files via personal email or unencrypted messaging applications.
• Awareness training: Ensure your tax accounting team understands that a leaked Master File can result in millions of dollars in fines from data protection agencies.

Once implementation steps have been established to control security risks and tax compliance, a crucial question that many businesses often misunderstand is, "To what extent should these measures be applied to each type of transfer pricing file?" In reality, local files and master files have completely different scopes, levels of detail, and security risks, requiring distinct approaches and data governance.

See details: Instructions for declaring global tax returns on the HTKK system.

What is the difference between Master File and Local File? From a tax compliance and data security perspective.

To avoid confusion in the process of creating and managing transfer pricing records, businesses need to clearly understand the core differences between Master Files and Local Files. These two types of records differ not only in scope and information content, but also in the level of data security risk and the governing legal framework. The table below will help businesses clearly see the important comparison criteria, thereby building appropriate tax compliance and data security strategies for each type of record.

The comparison table shows that Master Files and Local Files differ not only in scope and content but also in risk levels from a global data security regulatory perspective. While Local Files are primarily governed by domestic tax laws, Master Files require businesses to adopt higher security standards and comply with multiple international legal frameworks. Identifying these differences correctly is fundamental for businesses to develop effective tax compliance and data management strategies in the future.

Key changes and trend forecasts for 2026

The world is moving towards absolute transparency. One notable trend is the Public CbCR (Crosscountry Credentialing Report). As a portion of tax data becomes public, the security pressure on the rest of the Master File will increase even further.

Furthermore, the introduction of the Global Minimum Tax (Pillar Two) requires corporations to collect data at an unprecedented level of detail. This means that the flow of sensitive data across borders will skyrocket, and compliance with global data protection regulations will no longer be an option but a prerequisite for business survival.

Conclude

In the context of 2025, the Master File is no longer a purely tax document, but has become a sensitive intersection between BEPS compliance, transfer pricing management, and global data privacy regulations. Preparing and submitting the Master File on time is only a necessary condition; the sufficient condition for businesses to avoid long-term risks lies in the ability to control data, manage access rights, and simultaneously comply with multiple international legal frameworks.

In reality, the risks arising from the leakage of information in Master Files can be just as serious, if not more serious, than tax adjustments. Businesses face the risk of being assessed for taxes and penalties for transfer pricing, and may also face legal liability for violating global data protection regulations in multiple countries. 

To adapt to the trend of increasing tax transparency and data oversight, businesses need to build an integrated governance model encompassing tax, legal, and technological aspects. With tax compliance becoming mandatory, global data security regulations are crucial, determining the sustainable operation and reputation of the Group.

Contact MAN – Master Accountant Network to receive support and advice from our team of experts tailored to your specific situation!

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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.

Editorial Board of MAN – Master Accountant Network