The Evolving Landscape of Transfer Pricing in Vietnam
In the current climate, where uncertainty is a constant, the proactive use of bilateral and multilateral advance pricing agreements (BAPA and MAPA) presents a significant opportunity for businesses. This approach shifts the focus from merely defending against tax challenges to managing risks in a more strategic and forward-thinking manner.
Vietnamese tax authorities have intensified their efforts in conducting audits and inspections, particularly targeting enterprises engaged in related-party transactions (RPTs). According to a report by the Department of Taxation, during the first half of 2025 alone, 119 companies with RPTs were subjected to audits. These audits resulted in approximately VND600 billion ($22.8 million) in additional taxes and administrative penalties, VND3.579 trillion ($135.9 million) in loss reductions, VND3.2 billion ($121,531) in disallowed input VAT, and VND5.091 trillion ($193.7 million) in upward adjustments to taxable income. A significant portion of these adjustments—around 60%—was attributed to transfer pricing (TP) audits, with VND360 billion ($13.7 million) in additional taxes, VND3.139 trillion ($119.3 million) in reduced losses, and VND4.957 trillion ($188.4 million) in upward adjustments to taxable income.
This increased scrutiny has led to a broader focus on companies that incur intra-group service charges paid to foreign related parties. This shift highlights a growing emphasis on examining the substance, value creation, and benefit testing of cross-border services.
Tat Hong Quan, tax partner and national transfer pricing leader at Deloitte Vietnam, noted, “This trend signals a new phase in Vietnam’s TP enforcement, one that combines data-driven risk selection with thematic deep dives into specific transaction types.”
Common Queries During Tax Audits and Inspections
During tax audits and inspections, authorities often focus on three major areas:
- Compliance with TP documentation requirements: Enterprises are required to submit a TP documentation package within the prescribed deadline. Failure to do so can trigger the tax authorities’ right to impose adjustments, including the re-determination of arm’s length prices or margins for the company’s RPTs.
- Comparability analysis: If a company fails to select an appropriate TP method, cannot substantiate the reliability of the data sources used for benchmarking purposes, or fails to demonstrate that prices or profit margins in the course of RPTs comply with the arm’s length principle, it will face a high risk of TP adjustments.
- Substance of intra-group service transactions: Intra-group service charges and royalty payments have become key focus areas in recent audits. Tax authorities increasingly demand evidence that the services were actually rendered, that they provided measurable benefits, and that the fees and margins applied have been consistent with the arm’s length principle.
Quan added, “These trends highlight that merely maintaining formal documentation is no longer sufficient. Tax authorities now expect substance, consistency, and contemporaneous evidence. Even well-prepared taxpayers may face extensive follow-up queries. Against this backdrop, the Advance Pricing Agreement (APA) mechanism has emerged as a practical solution for enterprises seeking to manage TP risks, ensure predictability, and reduce the likelihood of future audit disputes.”
APA – A New Era of Cooperative Tax Risk Management
An APA is a forward-looking arrangement between a taxpayer and the tax authority that determines the TP methodology to be applied to specific RPTs in advance. Unlike traditional audit mechanisms where risks are evaluated after the fact, APAs allow taxpayers to negotiate and agree upfront on pricing or profit levels, providing greater certainty, ability, and alignment with tax regulations.
Globally, mechanisms such as Unilateral APA (UAPA), BAPA, and MAPA—collectively referred to as APAs—have long been adopted in advanced tax systems of countries like the US, Japan, and South Korea, reflecting a modern shift towards cooperative compliance. In Vietnam, the mechanism was first introduced in 2013, but it has only seen notable improvements in 2025, driven by updated regulations.
On June 11, the government issued Decree No.122/2025/ND-CP, which authorizes the Ministry of Finance to approve and admit BAPAs and MAPAs without requiring prior approval from the government, as previously mandated. This new regulation significantly shortens the processing time, enhances procedural flexibility, and encourages greater taxpayer participation in the APA mechanism.
From a business perspective, these regulatory changes create tangible opportunities for multinational corporations to apply for APAs covering complex intercompany transactions such as royalty payments and intra-group service charges. Moreover, negotiating BAPAs or MAPAs helps mitigate the risk of double taxation arising from cross-border RPTs.
Deloitte Vietnam was honored with three prestigious awards at the International Tax Review Asia-Pacific Tax Awards 2025. This achievement underscores Deloitte’s outstanding tax capabilities and affirms its reputation as a trusted leader in tax in Vietnam and in the region.
The awards are presented by the International Tax Review, one of the most influential tax professional journals globally, with evaluations based on four main dimensions: business scale, innovation, complexity, and impact.
Building on the momentum, Deloitte Vietnam will continue to maintain the highest standards of client service and foster the sustainable growth of taxation.
