Transfer pricing: New audit trends and opportunities from APA

Transfer pricing (TP) has never been more central to Vietnam’s tax landscape. As tax and TP audits become more sophisticated and cross-border scrutiny intensifies, enterprises face mounting pressure to demonstrate that their related party transactions (RPTs) are arm’s length.

Against this backdrop, seeking certainty through application for Bilateral and Multilateral Advance Pricing Agreements (BAPA and MAPA) represents a pivotal opportunity, shifting the conversation from reactive defense to proactive risk management.

Transfer pricing – The focus point

In recent years, the Vietnamese tax authorities have intensified tax audit and inspection activities targeting enterprises engaged in RPTs. According to the Department of Taxation’s report, in the first half of 2025 alone, 119 enterprises having RPTs were audited, resulting in approximately VND 600 billion of additional tax and administrative penalties, VND 3,579 billion in loss reduction, VND 3.2 billion of disallowed input VAT; and VND 5,091 billion in upward adjustments to taxable income. Notably, TP audits contributed roughly 60% of these adjustments, with around VND 360 billion in additional tax payment; VND 3,139 billion in reduced losses; and VND 4,957 billion in upward adjustments to taxable income.

Beyond their traditional focus on large or consecutively loss-making enterprises, tax authorities are now extending scrutiny to companies incurring intra-group service charges paid to foreign related parties. This change reflects a broader shift toward examining the substance, value creation, and benefit test of cross-border services.

Mr. Tat Hong Quan, Tax Partner and National Transfer pricing leader, Deloitte Vietnam, shares that 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, the authorities often focus on three major areas: the compliance to the three-tier TP documentation requirements, the comparability analysis, and the substance of specific intra-group service transactions.

As tax and TP audits become more sophisticated and cross-border scrutiny intensifies, enterprises face mounting pressure to demonstrate that their related party transactions RPTs are arm’s length.

First, enterprises are required to submit the TP Documentation package within the prescribed deadline. Failure to do so would trigger the tax authorities’ right to impose adjustments including the re-determination of arm’s length prices or margins for the company’s RPTs.

Second, regarding comparability analysis, if a company fails to select an appropriate TP method, cannot substantiate the reliability of the data sources used for benchmarking purpose, 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.

Third, 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.

According to Mr. Tat Hong Quan, 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 proactively 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, in advance, determines the TP methodology to be applied to specific RPTs. Unlike traditional audit mechanisms where risks are evaluated after the fact, APA allows taxpayers to negotiate and agree upfront on pricing or profit levels, thereby providing greater certainty, predictability, and alignment with tax regulations.

Globally, such mechanisms including Unilateral APA (“UAPA”), BAPA and MAPA – collectively referred to as APAs, have long been adopted in advanced tax systems of countries like the United States, Japan, and South Korea, etc., reflecting a modern shift toward cooperative compliance. In Vietnam, the mechanism was first introduced in 2013, however, it is only by 2025 that the mechanism has seen notable improvements, driven by the issuance of significant update regulation.

On June 11, 2025, the Vietnamese Government issued Decree No. 122/2025/ND-CP, which authorizes the Ministry of Finance to approve and conclude 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 reinforces its market leadership

Deloitte Vietnam has been honored with three prestigious awards at the International Tax Review Asia-Pacific Tax Awards 2025: “Tax Firm of the Year” (for the fifth consecutive year), “Transfer Pricing Firm of the Year,” and “Tax Disputes Firm of the Year” in Vietnam.

This achievement underscores Deloitte’s outstanding tax capabilities and reaffirms its reputation as a trusted leader in tax in Vietnam and in the region.

The awards are presented by the International Tax Review (ITR) – 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 uphold the highest standards of client service and foster the sustainable growth of the taxation.