{"id":2546,"date":"2025-11-27T01:58:09","date_gmt":"2025-11-27T08:58:09","guid":{"rendered":"https:\/\/giaodichlienket.man.net.vn\/?p=2546"},"modified":"2025-11-27T01:58:09","modified_gmt":"2025-11-27T08:58:09","slug":"phuong-phap-ty-suat-loi-nhuan-thuan","status":"publish","type":"post","link":"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/","title":{"rendered":"Optimizing the Net Margin Method (TNMM): The Secret to Elevating Related Party Transaction Profiles and Reducing Tax Risks"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The net profit margin method (TNMM) is currently the central tool in the global transfer pricing system, widely applied by the OECD and the Vietnamese tax authorities thanks to its flexibility and high reliability. In the context of increasingly strict tax administration, especially under the impact of BEPS and <\/span><a href=\"https:\/\/thuvienphapluat.vn\/van-ban\/Doanh-nghiep\/Nghi-dinh-132-2020-ND-CP-quy-dinh-quan-ly-thue-doi-voi-doanh-nghiep-co-giao-dich-lien-ket-452218.aspx\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">Decree 132\/2020\/ND-CP<\/span><\/a><span style=\"font-weight: 400;\">, enterprises not only need to understand the net profit margin method correctly but also need to implement it according to international standards to protect their tax position and minimize the risk of collection. The following article provides in-depth analysis, based on official references and practical experience, to help enterprises grasp the nature, application process and requirements in using the net profit margin method of related-party transactions accurately and sustainably.<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Index<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewbox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewbox=\"0 0 24 24\" version=\"1.2\" baseprofile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Dinh_nghia_phuong_phap_ty_suat_loi_nhuan_thuan\" >Definition of net profit margin method<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Quy_trinh_ap_dung_phuong_phap_ty_suat_loi_nhuan_thuan\" >Procedure for applying the net profit margin method<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Buoc_1_Phan_tich_chuc_nang_va_Lua_chon_ben_duoc_phan_tich\" >Step 1: Functional Analysis and Selection of the Analyzed Party<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Buoc_2_Lua_chon_Chi_so_Loi_nhuan_Thuan_Net_Profit_Indicator_%E2%80%93_NPI_phu_hop\" >Step 2: Choose the appropriate Net Profit Indicator (NPI)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Buoc_3_Thuc_hien_phan_tich_so_sanh\" >Step 3: Conduct comparative analysis<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Buoc_4_Xac_dinh_khoang_Giao_dich_doc_lap\" >Step 4: Determine the Independent Trading Range<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Dieu_chinh_von_luu_dong\" >Adjustment of working capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Uu_diem_va_han_che_cua_phuong_phap_ty_suat_loi_nhuan_thuan\" >Advantages and disadvantages of net profit margin method<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Uu_diem_noi_bat\" >Outstanding advantages<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Han_che_va_rui_ro_can_luu_y\" >Limitations and risks to note<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Kinh_nghiem_thuc_tien_va_tinh_uy_quyen\" >Practical experience and delegation<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Kinh_nghiem_trong_lua_chon_Ben_duoc_phan_tich_Tested_Party\" >Experience in selecting the Tested Party<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Chuyen_mon_trong_xu_ly_Giao_dich_Dich_vu\" >Expertise in Service Transaction Processing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Tham_quyen_va_do_tin_cay\" >Authority and credibility<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#TNMM_trong_Luat_Thue_Viet_Nam\" >TNMM in Vietnamese Tax Law\u00a0<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Quy_dinh_ve_Phuong_phap_va_muc_do_uu_tien\" >Regulations on Methods and Priority Levels<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Yeu_cau_ve_Khoang_giao_dich_doc_lap\" >Independent Trading Space Requirements\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Loi_ich_khi_tuan_thu_phuong_phap_ty_suat_loi_nhuan_thuan\" >Benefits of following the net profit margin method<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Ket_luan_va_khuyen_nghi\" >Conclusion and recommendations<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/giaodichlienket.man.net.vn\/en\/phuong-phap-ty-suat-loi-nhuan-thuan\/#Thong_tin_lien_he_MAN_%E2%80%93_Master_Accountant_Network\" >Contact information MAN \u2013 Master Accountant Network<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Dinh_nghia_phuong_phap_ty_suat_loi_nhuan_thuan\"><\/span><b>Definition of net profit margin method<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The net profit margin method (TNMM) is a method of determining the appropriate price or profit margin for a related party transaction by comparing the net profit margin (Net Profit Indicator) achieved from that transaction with the net profit margin achieved by comparable independent companies in comparable transactions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The key difference between the Net Profit Margin Method and the Resale Price Method and the Cost Plus Method is that it relies on Net Profit at the transaction or overall business level, rather than Gross Profit. This makes the Net Profit Margin Method less susceptible to small differences in the functions, assets, or accounting standards of independent companies.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Quy_trinh_ap_dung_phuong_phap_ty_suat_loi_nhuan_thuan\"><\/span><b>Procedure for applying the net profit margin method<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<figure id=\"attachment_2550\" aria-describedby=\"caption-attachment-2550\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-2550\" src=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Quy-trinh-ap-dung-phuong-phap-ty-suat-loi-nhuan-thuan.jpg\" alt=\"Quy tr\u00ecnh \u00e1p d\u1ee5ng ph\u01b0\u01a1ng ph\u00e1p t\u1ef7 su\u1ea5t l\u1ee3i nhu\u1eadn thu\u1ea7n\" width=\"1200\" height=\"800\" srcset=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Quy-trinh-ap-dung-phuong-phap-ty-suat-loi-nhuan-thuan.jpg 1200w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Quy-trinh-ap-dung-phuong-phap-ty-suat-loi-nhuan-thuan-300x200.jpg 300w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Quy-trinh-ap-dung-phuong-phap-ty-suat-loi-nhuan-thuan-1024x683.jpg 1024w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Quy-trinh-ap-dung-phuong-phap-ty-suat-loi-nhuan-thuan-768x512.jpg 768w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Quy-trinh-ap-dung-phuong-phap-ty-suat-loi-nhuan-thuan-18x12.jpg 18w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-2550\" class=\"wp-caption-text\">Procedure for applying the net profit margin method<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">Applying the net profit margin method in related party transactions requires a rigorous analytical process, which includes the following four main steps:<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Buoc_1_Phan_tich_chuc_nang_va_Lua_chon_ben_duoc_phan_tich\"><\/span><b>Step 1: Functional Analysis and Selection of the Analyzed Party<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">This is the most important and decisive step in the entire process of applying the net profit margin method.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Functional analysis: This analysis specifically identifies the functions performed, assets used (including intangible and tangible assets), and risks borne by each party participating in the related-party transaction.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Select the Tested Party, specifically:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Principle: Choose the party to the related-party transaction that has less complex operations, lower risks, and holds fewer unique intangible assets.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rationale: When selecting a less complex party, it is easier and more accurate to search and compare data with independent companies (with simple functions), which helps to increase the reliability of the net profit margin method in related-party transactions. A typical example is selecting a toll manufacturer or a limited risk distributor as the Tested Party.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Once the in-depth Functional Analysis has been completed and the Tested Party has been identified with clearly defined functions, assets and risks, the next step is to select the most appropriate Net Profit Index (NPI). This is the core financial measure to compare economic performance, ensuring the accuracy of the net profit margin method in related-party transactions.<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Buoc_2_Lua_chon_Chi_so_Loi_nhuan_Thuan_Net_Profit_Indicator_%E2%80%93_NPI_phu_hop\"><\/span><b>Step 2: Choose the appropriate Net Profit Indicator (NPI)<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">The selection of an NPI should be based on the results of the Functional Analysis in Step 1. The ideal NPI is the one that best reflects the relationship between the functions, assets, and risks being analyzed.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Common NPIs in the transfer pricing net profit margin method:<\/span><\/p>\n<table style=\"width: 100%; border-color: #000000;\" border=\"1\" cellspacing=\"2\" cellpadding=\"12\">\n<caption><b>Board: <\/b><span style=\"font-weight: 400;\">Net Profit Margin Index (NPI) used in the net profit margin method.<\/span><\/caption>\n<tbody>\n<tr>\n<td style=\"text-align: center;\"><b>Net Profit Index (NPI)<\/b><\/td>\n<td style=\"text-align: center;\"><b>Fit\u00a0<\/b><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left;\"><span style=\"font-weight: 400;\">Net Profit Margin on Total Cost.<\/span><\/td>\n<td style=\"text-align: left;\"><span style=\"font-weight: 400;\">Manufacturer, Service Provider: Demonstrates cost management effectiveness.<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left;\"><span style=\"font-weight: 400;\">Net Profit Margin on Sales.<\/span><\/td>\n<td style=\"text-align: left;\"><span style=\"font-weight: 400;\">Low Risk Distributor, Service Provider: Represents the percentage of profit retained from each dollar of revenue.<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left;\"><span style=\"font-weight: 400;\">Net Profit Margin on Operating Assets.<\/span><\/td>\n<td style=\"text-align: left;\"><span style=\"font-weight: 400;\">Asset-intensive parties: Demonstrate efficient use of capital or assets<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">The above net profit indexes (NPI) are the key basis for choosing the appropriate measurement tool when applying the net profit margin method. Choosing the right NPI helps to accurately reflect the nature of the functions and risks of the analyzed party, while ensuring the comparison results are consistent, transparent and in compliance with OECD standards as well as Decree 132\/2020\/ND-CP.<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Buoc_3_Thuc_hien_phan_tich_so_sanh\"><\/span><b>Step 3: Conduct comparative analysis<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">This is the process of searching, screening and adjusting data from independent companies to determine independent profit margins.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Search: Use international financial databases (such as Amadeus, Orbis, S&amp;P Capital IQ) to search for independent companies with similar functions and business lines as the selected Analyzed Party.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Conduct Qualitative and Quantitative screening, specifically:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Qualitative Screening: Eliminate companies that have significant related-party transactions, have very different operations, are in the process of bankruptcy\/merger, or hold unique intangible assets.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Quantitative Screening: Applies criteria of revenue, asset size, and continuity of data. Usually requires financial data for 3 consecutive years.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Data Collection and Adjustments such as Financial data (Income Statement, Balance Sheet) are collected to calculate NPI for each comparable company.<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Buoc_4_Xac_dinh_khoang_Giao_dich_doc_lap\"><\/span><b>Step 4: Determine the Independent Trading Range<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">After calculating the NPIs of all the screened comparison companies, arrange the NPIs in ascending order and use the Quartiles statistical analysis. The independence interval is usually determined from:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">First quartile (Q1): Reasonable minimum return.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Third quartile (Q3): Reasonable maximum profit level.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Compare and conclude:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Compare the NPI of the Tested Party with the Independent Range (Q1 \u2013 Q3).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If NPI is between Q1 \u2013 Q3: The related party transaction price is considered to comply with ALP (In accordance with the related party transaction net profit margin method).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If NPI is outside the range: The enterprise must adjust the related party transaction price to bring NPI to the Median value of the independent range (according to Vietnam&#039;s regulations in Decree 132\/2020\/ND-CP).<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">However, to ensure absolute fairness and accuracy in comparison, especially when independent companies have differences in business cycles and credit terms, making adjustments is a professional requirement that cannot be ignored.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Dieu_chinh_von_luu_dong\"><\/span><b>Adjustment of working capital<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<figure id=\"attachment_2549\" aria-describedby=\"caption-attachment-2549\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-2549\" src=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Phuong-phap-ty-suat-loi-nhuan-thuan-cho-phep-dieu-chinh-von-luu-dong.jpg\" alt=\"Ph\u01b0\u01a1ng ph\u00e1p t\u1ef7 su\u1ea5t l\u1ee3i nhu\u1eadn thu\u1ea7n cho ph\u00e9p \u0111i\u1ec1u ch\u1ec9nh v\u1ed1n l\u01b0u \u0111\u1ed9ng\" width=\"1200\" height=\"800\" srcset=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Phuong-phap-ty-suat-loi-nhuan-thuan-cho-phep-dieu-chinh-von-luu-dong.jpg 1200w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Phuong-phap-ty-suat-loi-nhuan-thuan-cho-phep-dieu-chinh-von-luu-dong-300x200.jpg 300w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Phuong-phap-ty-suat-loi-nhuan-thuan-cho-phep-dieu-chinh-von-luu-dong-1024x683.jpg 1024w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Phuong-phap-ty-suat-loi-nhuan-thuan-cho-phep-dieu-chinh-von-luu-dong-768x512.jpg 768w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Phuong-phap-ty-suat-loi-nhuan-thuan-cho-phep-dieu-chinh-von-luu-dong-18x12.jpg 18w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-2549\" class=\"wp-caption-text\">The net profit margin method allows for adjustments to working capital.<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">A highly specialized aspect of the net profit margin method in related party transactions is the making of adjustments to enhance the accuracy of comparisons.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Because NPI of independent companies can be affected by differences in Operating Assets (such as Receivables, Inventory, Payables), especially working capital.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A Working Capital Adjustment (WCA) is performed to remove the effects of these differences, allowing for a more \u201con-par\u201d comparison. This adjustment accounts for the difference in cost of capital incurred from holding various working capital items between a selection of Analysed Entities and the comparable company.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">After understanding the complex process and technical requirements such as Working Capital Adjustment, MAN \u2013 Master Accountant Network will analyze the outstanding advantages that have made the net profit margin method of related transactions become the top choice, while pointing out the limitations that need to be managed.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Uu_diem_va_han_che_cua_phuong_phap_ty_suat_loi_nhuan_thuan\"><\/span><b>Advantages and disadvantages of net profit margin method<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Once you have identified the appropriate net profit margin and have a good understanding of how the net profit margin method works in practice, the next step is to comprehensively assess the advantages that make this method widely used, while identifying potential limitations that may affect the reliability of the analysis. This will help businesses gain a deeper understanding of the method&#039;s applicability in each specific context.<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Uu_diem_noi_bat\"><\/span><b>Outstanding advantages<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Below are the outstanding advantages that make this method a priority for experts and tax authorities:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Difference Resistance: The net profit margin method is less affected by differences in functions, assets (other than significant intangible assets), or national accounting rules for gross-level items (such as manufacturing costs, cost of goods sold) than CUP, Resale Price, and Cost Plus. This makes the net profit margin method in related-party transactions a safer choice.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Easy to Find Comparable Data: Because of its focus on net profit, the net profit margin method allows for the use of comparable companies that are slightly less similar at the specific transaction level, as long as the overall function and risk are comparable.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">High flexibility: The net profit margin method in related-party transactions can be widely applied to most types of internal business transactions, from manufacturing, distribution, to service provision.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Widely accepted: This is a method widely accepted by both the OECD and the Vietnamese tax authorities and is often the default method when CUP data is not available.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">However, although the net profit margin method in related-party transactions offers many advantages in terms of flexibility and the ability to cope with complexities in valuation, its application is not entirely risk-free. To ensure compliance and effectiveness, businesses need to be aware of the following potential limitations:<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Han_che_va_rui_ro_can_luu_y\"><\/span><b>Limitations and risks to note<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">However, this method also has some limitations and risks that businesses need to pay special attention to:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Sensitivity to Firm-Level Data: The net profit margin method uses net profit data for an entire independent firm. If that independent firm engages in many different types of transactions (not just the transaction being analyzed), the NPI may be biased.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Accurate Functional Analysis Required: Although less sensitive at the granular level, the identification of functions and risks still needs to be extremely accurate in order to select the appropriate NPI and Tested Party. Failure at this step will result in the application of the net profit margin method being rejected.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Reliance on public financial data: Finding high-quality comparative data, especially in emerging markets like Vietnam, remains difficult and costly.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Although the transfer pricing net profit margin method offers many advantages in terms of flexibility and ability to cope with valuation complexities, to effectively manage the above limitations and risks, the application of this method needs to be underpinned by practical experience and deep expertise.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Kinh_nghiem_thuc_tien_va_tinh_uy_quyen\"><\/span><b>Practical experience and delegation<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<figure id=\"attachment_2548\" aria-describedby=\"caption-attachment-2548\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-2548\" src=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Kinh-nghiem-thuc-tien-tu-chuyen-gia-ve-phuong-phap-ty-suat-loi-nhuan-thuan.jpg\" alt=\"Kinh nghi\u1ec7m th\u1ef1c ti\u1ec5n t\u1eeb chuy\u00ean gia v\u1ec1 ph\u01b0\u01a1ng ph\u00e1p t\u1ef7 su\u1ea5t l\u1ee3i nhu\u1eadn thu\u1ea7n\" width=\"1200\" height=\"800\" srcset=\"https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Kinh-nghiem-thuc-tien-tu-chuyen-gia-ve-phuong-phap-ty-suat-loi-nhuan-thuan.jpg 1200w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Kinh-nghiem-thuc-tien-tu-chuyen-gia-ve-phuong-phap-ty-suat-loi-nhuan-thuan-300x200.jpg 300w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Kinh-nghiem-thuc-tien-tu-chuyen-gia-ve-phuong-phap-ty-suat-loi-nhuan-thuan-1024x683.jpg 1024w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Kinh-nghiem-thuc-tien-tu-chuyen-gia-ve-phuong-phap-ty-suat-loi-nhuan-thuan-768x512.jpg 768w, https:\/\/giaodichlienket.man.net.vn\/wp-content\/uploads\/2025\/11\/Kinh-nghiem-thuc-tien-tu-chuyen-gia-ve-phuong-phap-ty-suat-loi-nhuan-thuan-18x12.jpg 18w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-2548\" class=\"wp-caption-text\">Practical experience from experts on net profit margin method<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">For a Transfer Pricing dossier using the net profit margin method to be considered to comply with high standards, a combination of deep technical knowledge and practical experience is required.<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Kinh_nghiem_trong_lua_chon_Ben_duoc_phan_tich_Tested_Party\"><\/span><b>Experience in selecting the Tested Party<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Experience shows that choosing a Tested Party needs to be a strategic decision:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Low-Risk Manufacturing or Distribution: In most cases, companies that only perform simple manufacturing, processing, or basic distribution functions (do not hold brands, do not take on large market risks) are optimal choices for Tested Parties. Their profits are expected to be stable and comparable.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Avoid Selecting Intangible Asset Owners: Companies holding significant intangible assets (such as patents, global brands) should never be selected as the Tested Party, as it is difficult to find reasonable independent comparable data.<\/span><\/li>\n<\/ul>\n<h4><span class=\"ez-toc-section\" id=\"Chuyen_mon_trong_xu_ly_Giao_dich_Dich_vu\"><\/span><b>Expertise in Service Transaction Processing<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">The net profit margin method of related-party transactions is the primary method used to value internal service transactions, especially low value-added services.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Low Value Added Services: OECD and Decree 132\/2020\/ND-CP stipulate that the standard profit margin for value added services is 5% on total costs. However, if businesses do not want to use this simple margin, they must apply the net profit margin method and demonstrate that another standard profit margin is reasonable.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cost Allocation: Expertise is required to properly allocate general operating costs to specific related transactions, ensuring that NPI calculations are not biased.<\/span><\/li>\n<\/ul>\n<h4><span class=\"ez-toc-section\" id=\"Tham_quyen_va_do_tin_cay\"><\/span><b>Authority and credibility<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">The authority of a report using the net profit margin method is reinforced by strict compliance with the Transfer Pricing Documentation requirements.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Local File: Required, detailing the Functional Analysis (step 1) and the results of steps 3 and 4 using the transfer pricing method.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Master File: Provides a comprehensive picture of multinational enterprises (MNEs) and the group&#039;s Transfer Pricing strategy.<\/span><\/li>\n<\/ul>\n<p><b>Accountability:<\/b><span style=\"font-weight: 400;\"> The documentation must be sufficiently transparent and detailed to be easily understood and accepted by the tax authorities. Any adjustments and the reasons for choosing the net profit margin method must be clearly explained.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"TNMM_trong_Luat_Thue_Viet_Nam\"><\/span><b>TNMM in Vietnamese Tax Law\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Decree 132\/2020\/ND-CP specifies the application of Transfer Pricing methods, including the transfer pricing net profit margin method.<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Quy_dinh_ve_Phuong_phap_va_muc_do_uu_tien\"><\/span><b>Regulations on Methods and Priority Levels<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Decree 132 stipulates that, when applying TP methods, enterprises must comply with the order of priority. Although CUP (Comparable Uncontrolled Price Method) is always the top priority, but due to the practical difficulty of finding a perfect CUP, the net profit margin method of related-party transactions is often the next alternative after excluding Resale Price and Cost Plus due to their limitations.<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Yeu_cau_ve_Khoang_giao_dich_doc_lap\"><\/span><b>Independent Trading Space Requirements<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Vietnamese tax law clearly stipulates the use of Quartile statistical analysis:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Reasonable Range: The independent range is determined from the First Quartile (Q1) to the Third Quartile (Q3) of the NPI of the comparison companies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Mandatory Adjustment Regulation: If the NPI of the Tested Party is outside the range Q1 \u2013 Q3 (i.e. lower than Q1 or higher than Q3), the enterprise must self-adjust to bring the NPI to the Median Value. This is a strict regulation in Vietnam, unlike some countries that only require adjustment to any point in the range.<\/span><\/li>\n<\/ul>\n<h4><span class=\"ez-toc-section\" id=\"Loi_ich_khi_tuan_thu_phuong_phap_ty_suat_loi_nhuan_thuan\"><\/span><b>Benefits of following the net profit margin method<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Applying the standard method of net profit margin of related-party transactions according to Decree 132\/2020\/ND-CP helps businesses:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Minimize Tax Risk: Proactively demonstrate that your NPI is within independent limits, avoiding tax arrears and penalties due to adjustments by tax authorities.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ensuring Financial Reporting Integrity: Profit margins accurately reflect the company&#039;s role and risks within the group&#039;s value chain.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Ket_luan_va_khuyen_nghi\"><\/span><b>Conclusion and recommendations<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The net profit margin method in related-party transactions (TNMM) is a mainstay in the global Transfer Pricing system, trusted by tax authorities and multinational corporations for its flexibility and relatively high reliability.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, the success of applying the transfer pricing method depends entirely on the quality of the Functional Analysis and the accuracy of the Benchmarking process.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Therefore, to ensure the effective application of the net profit margin method on related-party transactions, enterprises need to prioritize:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Prioritize Functional Analysis: Always invest time and resources to conduct an extensive Functional Analysis. Poor analysis is the number one reason why Valuation Documents are rejected.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Regular updates: Regularly update comparative data (at least every 3 years) and review the chosen methodology to ensure its suitability to changing market conditions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Documentation Ready Justification: Ensure your Valuation Documentation is not only compliant but also transparent enough to clearly explain to the tax authorities the reasons for choosing the net profit margin method and the adjustments made.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Special Financial Risk Management: Focus on compliance with complex regulations such as limits on<\/span><a href=\"https:\/\/giaodichlienket.man.net.vn\/en\/chi-phi-lai-vay-trong-giao-dich-lien-ket\/\"> <span style=\"font-weight: 400;\">interest expense in related party transactions<\/span><\/a><span style=\"font-weight: 400;\"> according to Decree 132\/2020\/ND-CP to avoid significant tax adjustments.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Consult an expert: To ensure compliance with both OECD standards and specific Vietnamese regulations, consulting or hiring an experienced transfer pricing consultant is essential to minimize the risk of tax collection.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Contact MAN \u2013 Master Accountant Network now for advice and support!<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Thong_tin_lien_he_MAN_%E2%80%93_Master_Accountant_Network\"><\/span><b>Contact information MAN \u2013 Master Accountant Network<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Mobile\/Zalo: 0903 963 163 \u2013 0903 428 622<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Email: man@man.net.vn<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Content production by: Mr. <\/span><a href=\"https:\/\/man.net.vn\/le-hoang-tuyen\/\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">Le Hoang Tuyen<\/span><\/a><span style=\"font-weight: 400;\"> \u2013 Founder &amp; CEO MAN \u2013 Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.<\/span><\/p>\n<p style=\"text-align: right;\"><b>Editor MAN \u2013 Master Accountant Network<\/b><\/p>","protected":false},"excerpt":{"rendered":"<p>Ph\u01b0\u01a1ng ph\u00e1p t\u1ef7 su\u1ea5t l\u1ee3i nhu\u1eadn thu\u1ea7n (TNMM) hi\u1ec7n \u0111ang l\u00e0 c\u00f4ng c\u1ee5 tr\u1ecdng t\u00e2m trong h\u1ec7 th\u1ed1ng \u0111\u1ecbnh gi\u00e1 giao d\u1ecbch li\u00ean k\u1ebft to\u00e0n c\u1ea7u, \u0111\u01b0\u1ee3c OECD v\u00e0 c\u01a1 quan thu\u1ebf Vi\u1ec7t Nam \u00e1p d\u1ee5ng r\u1ed9ng r\u00e3i nh\u1edd t\u00ednh linh ho\u1ea1t v\u00e0 \u0111\u1ed9 tin c\u1eady cao. Trong b\u1ed1i c\u1ea3nh qu\u1ea3n l\u00fd thu\u1ebf ng\u00e0y c\u00e0ng [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":2547,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2546","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"_links":{"self":[{"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/posts\/2546","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/comments?post=2546"}],"version-history":[{"count":1,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/posts\/2546\/revisions"}],"predecessor-version":[{"id":2551,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/posts\/2546\/revisions\/2551"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/media\/2547"}],"wp:attachment":[{"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/media?parent=2546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/categories?post=2546"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/giaodichlienket.man.net.vn\/en\/wp-json\/wp\/v2\/tags?post=2546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}