Vietnam's transfer pricing rules under Decree 132/2020 require multinational groups operating in Vietnam to prepare contemporaneous documentation supporting the arm's-length pricing of related-party transactions. The documentation includes a Local File (specific to the Vietnam entity), a Master File (group-wide), and for the largest groups, Country-by-Country Reporting. This guide explains how TP works in practice: who must comply, what the Local File and Master File contain, how benchmarking is conducted, how related-party transactions are analysed, and how to defend a TP audit. We have written it for tax directors, controllers, and transfer-pricing specialists of multinational groups with Vietnamese operations.
Decree 132/2020 and the arm's-length principle
Decree 132/2020/ND-CP (effective 20 December 2020) is the primary legislation governing transfer pricing in Vietnam. It replaced Decree 20/2017 and tightened several areas including related-party definitions, transaction thresholds, and documentation requirements.
The decree applies the arm's-length principle: related-party transactions must be priced as if conducted between independent parties under comparable circumstances. Methods to establish arm's-length pricing include CUP (comparable uncontrolled price), resale minus, cost plus, TNMM (transactional net margin method), and profit split.
The decree also includes the EBITDA cap (related-party interest deductible up to 30% of EBITDA) and the debt-to-equity restriction (3:1 net assets, 5:1 for certain industries). Non-arm's-length transactions are subject to back taxes, interest, and a 1–3x penalty.
Vietnam is a member of the OECD/G20 Inclusive Framework on BEPS and has implemented Pillar 2 (Global Anti-Base Erosion) rules with effect from 2024 for MNEs above the threshold.
Who must comply?
Local File is required for companies with related-party transactions of VND 50 billion or more in a fiscal year. Below the threshold, preparation of a contemporaneous file is best practice and reduces audit risk.
Master File is required for groups with consolidated revenue of VND 1,836 billion or more in the prior fiscal year.
CbCR is required for ultimate parent entities (UPEs) with consolidated revenue of EUR 750 million or more in the prior fiscal year. Vietnam-resident UPEs file directly; Vietnam-resident subsidiaries of foreign UPEs file a CbCR notification.
Failure to file triggers penalties of 1–3x the under-declared CIT, plus interest. Failure to prepare documentation triggers penalties even if no adjustment is ultimately made.
Local File requirements
The Local File contains: entity information (organisational structure, business description, financial overview); controlled transactions (description, amounts, comparables analysis); financial information (financial statements, segment data); and TP method analysis.
The Local File must be contemporaneous: prepared by the deadline for the CIT finalisation return (90 days after fiscal year-end) and available for GDT review at any time during the audit cycle.
The functional analysis identifies the functions performed, assets used, and risks assumed by the Vietnam entity. This analysis drives the selection of the tested party and the TP method.
Common Local File deficiencies: incomplete related-party transaction list, missing comparables analysis, weak functional analysis, inadequate benchmarking.
Master File requirements
The Master File is a group-level document containing: organisational structure (legal and operational), description of business (significant value drivers, supply chain, main geographic markets), intangibles (strategy, list, ownership, transfer pricing), inter-company financial activities (treasury, funding, guarantees), and financial and tax positions.
The Master File is typically prepared at the group level (by the parent's TP team) and shared with all operating entities. Vietnam-resident entities must have access to the Master File within the GDT's review window.
Master File preparation typically takes 6–10 weeks due to the group-level data collection. Coordination with the parent and other entities is the main timeline constraint.
Country-by-Country Reporting
CbCR provides the GDT with a global picture of the MNE group's revenue, profit, taxes paid, and economic activity on a country-by-country basis. The data helps the GDT identify TP risk and allocate audit resources.
Vietnam-resident UPEs with consolidated revenue above EUR 750 million file CbCR directly with the GDT within 12 months of fiscal year-end. Vietnam-resident subsidiaries of foreign UPEs file a CbCR notification within 3 months identifying the UPE and the filing jurisdiction.
CbCR data is confidential between tax authorities under the Multilateral Convention. Vietnam exchanges CbCR data with treaty partners. The GDT uses the data for risk assessment, not as a basis for automatic adjustments.
Benchmarking studies
A benchmarking study supports the arm's-length nature of the tested party's margin. The study involves: selection of the tested party, selection of the profit-level indicator (PLI), identification of comparable companies, statistical analysis, and conclusion of the arm's-length range.
The most common PLI is the operating margin (EBIT/revenue) or the mark-up on costs (gross profit/cost). The choice depends on the functional analysis of the tested party.
Comparable databases: Bureau van Dijk (Orbis, Amadeus), RoyaltyStat, ktMINE. The choice of database and the search criteria significantly affect the results. We work with the major databases and have local comparable sets.
Arm's-length ranges are typically the interquartile range (25th–75th percentile) of the comparable set. The tested party's margin should fall within the range, or adjustments are required.
TP audit defence
TP audits are the most complex GDT audits. The audit typically focuses on: related-party transaction identification, arm's-length pricing, EBITDA cap, debt-to-equity, and benefit-test documentation.
Audit defence starts before the audit. We conduct pre-audit reviews to identify issues and prepare remediation strategies. Once the audit begins, the priorities are: respond to information requests promptly, present documentation professionally, and escalate to senior GDT officials where appropriate.
Most TP audits conclude with adjustments. The size of the adjustment depends on the documentation quality and the negotiation. GDT assessments exceeding VND 50 billion are typically resolved through the appeal process, with substantial reductions achievable on proper documentation.
Common TP mistakes
The most expensive TP mistakes: (1) claiming deductions for inter-company charges without contemporaneous documentation, (2) above-market royalty rates, (3) missing the EBITDA cap, (4) ignoring the debt-to-equity rule, (5) claiming management fees without benefit-test documentation.
The most common avoidable penalty: late Local File preparation. The GDT uses missing or late documentation as the basis for adjustments even if the pricing was actually arm's-length.
The most expensive avoidable penalty: gross negligence or fraud. The GDT assesses back tax, interest, and a 3x penalty (or higher under criminal provisions). We have seen VND 100 billion+ assessments for repeated gross negligence.
Frequently asked questions
The most common questions our tax and accounting team receives about vietnam transfer pricing guide: decree 132/ local file, master file, cbcr.
What is Decree 132/2020?
When is a Local File required?
When is a Master File required?
When is CbCR required?
What is the EBITDA cap?
What is the debt-to-equity rule?
How much does a Local File cost?
What is a TP audit?
What is the benefit test?
Can the GDT make TP adjustments?
This guide is published by Vietnam Tax Advisory. It is general in nature and based on publicly available Vietnamese law and GDT practice as of 18 June 2026. It does not constitute professional tax or legal advice. For advice specific to your situation, contact us via the contact page.