A transfer pricing audit in Vietnam reviews whether the prices and terms of your related-party transactions are set on an arm's length basis, and whether your company holds the records to prove it. For foreign-owned companies, the price paid for goods, services, loans or management fees to an overseas parent or sister company is a tax and audit question, not only a commercial one. This guide explains the process, the documents to prepare, and how Vietnam compares with Australia, New Zealand and Singapore.
What is a transfer pricing audit and when do you need one?
A related-party transaction is one between parties under common ownership or control. Examples include a Vietnamese subsidiary buying stock from an Australian parent, a subsidiary borrowing from its parent, or a company paying management or royalty fees to a group entity. A transfer pricing audit checks whether those prices and conditions are consistent with market terms, and whether the pricing is documented and explained.
You will usually need a transfer pricing review when:
- A foreign-invested company has material dealings with its parent or other group companies.
- Group reporting packs or consolidation returns need confirmed intercompany figures.
- The tax authority asks for an explanation of transaction prices, or a tax inspection is coming up.
- The company wants to review its position before finalising corporate income tax.
The legal framework in general terms
The general principle in Vietnam is that prices between related parties should reflect market prices on an arm's length basis. The taxpayer must declare its prices and be able to demonstrate the method it used. Vietnamese rules on transfer pricing documentation set out conditions, some exemptions, and a three-tier structure based on the OECD BEPS Action 13 approach. Specific conditions change over time, so check the current rules, or get advice, before relying on any threshold.
Accounting standards and consolidation to the parent
Vietnamese companies report under the Vietnamese Accounting Standards (VAS). Australia (AASB), New Zealand (NZ IFRS) and Singapore (SFRS(I)) are IFRS-based. The two systems differ in recognition and presentation, so a parent in Sydney, Auckland or Singapore that receives a Vietnamese pack should reconcile the numbers under both frameworks. On consolidation, intra-group transactions are eliminated. That means group profit can differ from the taxable profit of each entity, which is why intercompany pricing should be controlled from the start.
How a transfer pricing review is carried out
- Identify the related parties and the transaction types: goods, services, loans, royalties, management fees.
- Collect contracts, invoices, payment records and the relevant ledgers.
- Analyse the functions performed and risks borne by each party.
- Select a suitable pricing method and test the result against comparable data.
- Check consistency between contracts, ledgers, tax returns and financial statements.
- Conclude, and recommend changes to documentation, pricing policy or filings.
DAVA's process for transfer pricing audits
- We receive the request and agree on scope and purpose: tax compliance, internal advice, support for a financial statement audit, or engagement with the tax authority.
- We send a list of documents to prepare and agree on the scope of work.
- We review the records and speak with the finance and commercial staff involved.
- We analyse functions, assess risks and build the pricing analysis.
- We discuss preliminary findings and take the company's feedback.
- We issue the report and guide the update of documentation for the next period.
Timing
Timing depends on the number of related parties, the number of transaction types, how complete the records are, and how much comparable data needs to be gathered. Companies with up-to-date documentation usually shorten the review. After we receive preliminary records, we will agree a specific timetable with you.
Documents to prepare
- A list of related parties, ownership percentages and control relationships.
- Contracts and schedules for each related-party transaction.
- Invoices, payment records and period transaction summaries.
- Financial statements and ledgers for the relevant accounts.
- Corporate income tax returns and related schedules.
- Internal pricing policies and cost allocation papers, if any.
- Prior-year transfer pricing files, if they exist.
Cost
Transfer pricing audit fees depend on the number of related parties, transaction types, periods reviewed and the complexity of the records. There is no single fee for every case: it depends on the records, scope and purpose. Contact DAVA for an accurate quote, with free initial advice.
Common scenarios
Goods bought from the parent at a fixed price for many years
A price that has not moved with the market for a long period is a common point of tax-authority interest. A review will examine comparable data and suggest a supportable way to update the price.
A subsidiary borrowing from its parent
The interest rate and loan terms should be compared with what an independent lender would offer on similar terms. Where no interest is charged, or the rate is low, the company needs documented reasons.
Management fees allocated across the group
The allocation key must be clear, supported by a service agreement, and backed by evidence that the services were actually provided to each entity.
Vietnam vs Australia, New Zealand and Singapore
The table below is a general comparison for planning purposes only. Confirm current rules with the relevant tax authority or an adviser before acting.
| Criteria | Vietnam | Australia | New Zealand | Singapore |
|---|---|---|---|---|
| Who administers it | Tax authority (Ministry of Finance and General Department of Taxation) | Australian Taxation Office (ATO) | Inland Revenue (IRD) | Inland Revenue Authority of Singapore (IRAS) |
| Documentation | Required under the transfer pricing rules, subject to conditions and exemptions | Records must support arm's length pricing; ATO guidance applies | No statutory requirement, but IRD expects supporting documentation for cross-border dealings | Contemporaneous documentation expected; some transactions are exempt |
| Timing | Set by the regulations in force | Records should support the return as lodged | Documentation should be current, not reused from years ago | Prepared on or before the return filing due date |
| Standards base | OECD BEPS Action 13 approach | OECD-aligned guidance | OECD-aligned guidance | OECD-based IRAS guidelines |
| Penalty exposure | Administrative penalties for non-compliance | Documentation can help reduce penalty exposure | Penalties may apply where documentation is inadequate | Penalties apply for non-compliance; check current IRAS guidance |
How DAVA supports foreign companies and expats in Vietnam
DAVA works with foreign-invested companies, overseas groups and expatriate owners on valuation, tax-related reviews and audit support. Our team can work with you in English; documents can be prepared bilingually. Australian clients can also reach us through Qualified AU Pty Ltd on WhatsApp at +61 451 710 342, or by email at voan.sgg@gmail.com.
Frequently asked questions
Is transfer pricing documentation mandatory for every FDI company?
Not every case requires the same level of documentation. The obligation and the level of detail depend on company size, the type of related-party transactions and the conditions under current rules. Review your related-party dealings first to establish what applies.
How does a transfer pricing file differ from a financial statement audit?
A financial statement audit tests the overall presentation of figures. A transfer pricing review focuses on the price and terms of each group of related-party transactions and the evidence supporting them. The two are related but do not replace each other.
Do I need market comparable data?
Usually yes. Comparable data helps show that the price falls within a reasonable range. Where direct data is not available, alternative methods and sources may be used, depending on the transaction.
What should we do if the tax authority asks us to explain transaction prices?
Gather the existing records, reconcile the figures to contracts, invoices and returns, and get advice early. An explanation should rest on documents, not on assumptions about why the price was set.
Do small related-party transactions still need documentation?
It depends on size and transaction type. Some cases may be exempt from preparing a full file under the conditions in force. Check the conditions before deciding.
Does transfer pricing affect the financial statement audit?
It can. Related-party figures form part of the financial statements and notes. Early coordination between the financial statement audit and the transfer pricing review helps avoid adjustments later.
Conclusion
A transfer pricing review is best done before a tax authority asks questions, not after an inspection has started. Companies with complete records that match contracts, ledgers and returns are in a much stronger position. Contact DAVA for a preliminary review.
Contact DAVA for advice and a quote
- Hotline/Zalo: 0945 009 002 · 0906 915 002
- Phone: 028 6674 3333
- Email: voan.sgg@gmail.com
- WhatsApp (Australian clients, via Qualified AU Pty Ltd): +61 451 710 342
- Zalo OA: https://zalo.me/4259407728989141071
