Transfer pricing documentation in Vietnam: standard structure and common mistakes
The short answer
Businesses with related-party transactions must prepare transfer pricing (TP) documentation before filing the annual CIT finalisation, keep it and produce it when the tax authority asks.
Under Decree No. 255/2026/ND-CP, the documentation comprises:
information on related-party relationships and transactions (Appendix I);
the Local File (Appendix II);
the Master File (Appendix III);
the Country-by-Country Report (CbCR) for groups with consolidated revenue of EUR 750 million or more.
Decree No. 255/2026/ND-CP widens the exemption from preparing documentation: the revenue threshold rises to below VND 500 billion and the "simple functions" condition is removed, subject to other prescribed conditions. However, an exemption from documentation is not an exemption from disclosure, nor from the arm's length principle.
What is TP documentation for?
TP documentation is a "systematic explanation" of two things:
why prices between the business and its related parties are equivalent to prices between independent parties;
why the profit retained in Vietnam is reasonable given the functions performed, assets used and risks assumed.
Good documentation does not prevent an audit, but it significantly narrows the scope of adjustment when one happens. Without documentation, or with inadequate documentation, the business exposes itself to a deemed assessment. The 2025 Law on Tax Administration lists "non-compliance with related-party rules" as one of the grounds for a deemed assessment.
Who must prepare it, and who is exempt?
Case | Disclosure (Appendix I) | TP documentation |
Business with related-party transactions, not exempt | Yes | Yes, full Local File and Master File |
Business meeting the exemption conditions in Article 20 of Decree No. 255/2026/ND-CP (including the case of revenue below VND 500 billion, no revenue or costs from exploiting or using intangible assets, and other profit-margin conditions) | Yes | Exempt, but must still disclose and comply with the arm's length principle |
Ultimate parent in Vietnam with global consolidated revenue of EUR 750 million or more | Yes | Yes, plus CbCR obligations |
Note also that under Decree No. 255/2026/ND-CP, the tax authority does not use the CbCR to assess or adjust related-party prices. The CbCR is used for risk management only.
Standard structure of a Local File
Company and group information: ownership structure, organisation chart, business activities, strategy and competitors.
Description of related-party transactions: type, value, contract terms, flows of goods and money.
Functional analysis: functions performed, assets used and risks assumed. This is the most important part, and the one most often done superficially.
Selection of method: reasons for choosing the method (comparable uncontrolled price, resale price, cost plus, transactional net margin, profit split) and for rejecting the others.
Benchmarking: search strategy, screening criteria, list of comparables and the arm's length range.
Conclusion and adjustments (where results fall outside the range).
Attachments: contracts, financial statements and segmented data.
Comparable data sources. Decree No. 255/2026/ND-CP sets an order of priority:
public or official data sources (stock exchanges, commodity exchanges, national databases);
then commercial databases;
then other sources as prescribed.
The tax authority will also publish reference profit-margin data by sector to help businesses. The documentation should explain clearly why a given data source was chosen.
Seven mistakes that make documentation useless
A copy-paste functional analysis that does not reflect reality. For example, describing the business as a "low-risk contract manufacturer" when it finds its own customers and bears inventory risk.
No segmented data. The business has both related-party and independent transactions but does not separate profit by segment.
Non-comparable comparables: different industries, functions or scale, or outdated data.
Persistent losses without explanation. A "low-risk" entity that keeps making losses is a contradiction the tax authority will question immediately.
Documentation prepared after finalisation, or only when an audit begins, whereas the rules require it before filing.
No updates when the business model changes: new functions, transfers of intangibles, supply chain restructuring.
Intra-group contracts that do not match actual conduct or the documentation.
Illustrative case
Company W, a foreign-invested component manufacturer selling to its parent, has revenue of VND 1,200 billion. For years its documentation used the cost-plus method and concluded that results were "within the arm's length range".
In an audit, the tax authority raised two issues:
Company W buys its own raw materials and bears price risk, rather than only processing;
the comparables were mainly pure contract processors.
The documentation was therefore rejected. Profits were adjusted using data from a group of companies with more similar functions.
The lesson: if the functional analysis is wrong, everything that follows, from method to benchmarking, is wrong too.
Annual checklist
Identify all related parties under the 12 cases in Article 5 of Decree No. 255/2026/ND-CP.
Assess the documentation exemption conditions under the new threshold.
Interview departments (procurement, sales, production, R&D) to update the functional analysis.
Update benchmarking using the prescribed order of data sources.
Reconcile intra-group contracts with actual conduct.
Complete the documentation before filing the finalisation, and file all appendices.
Archive the documentation systematically, ready for consultation or audit.
FAQs
When must TP documentation be completed?
Before filing the annual CIT finalisation. It must be kept and produced at the tax authority's request.
Is revenue below VND 500 billion enough to be exempt?
Not necessarily. The business must also meet other conditions in Article 20 of Decree No. 255/2026/ND-CP, such as having no revenue or costs from exploiting or using intangible assets, and meeting the profit-margin conditions.
Can the CbCR be used to adjust prices?
No. Under Decree No. 255/2026/ND-CP, the tax authority does not use the CbCR to assess or adjust related-party prices.
What happens if no documentation is prepared?
The business may be penalised and faces the risk of a deemed tax assessment under the 2025 Law on Tax Administration for non-compliance with related-party rules.
Legal basis
Law on Tax Administration No. 108/2025/QH15 (Article 37 and the provisions on deemed assessments).
Decree No. 255/2026/ND-CP on tax administration of related-party transactions (Articles 5, 17, 18, 19, 20 and 21 and the Appendices).
Official Letter No. 4697/CT-CS of the Tax Department dated 9 July 2026.
OECD Transfer Pricing Guidelines (for reference).
How W&A can help
Good TP documentation starts with understanding the business model, not with a template. W&A supports foreign-invested companies and domestic groups with:
Local File and Master File preparation under Decree No. 255/2026/ND-CP, with functional analysis based on real interviews.
Benchmarking studies following the prescribed order of data sources, with clear selection reasoning.
Assessment of documentation exemptions and filing of the finalisation appendices.
Review and alignment of intra-group contracts with the documentation and actual conduct.
Defence of documentation in tax authority consultations and audits on related-party transactions.
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