Related-Party Transactions in Vietnam 2025: Increased Scrutiny & Tax Risk Mitigation

Amidst a volatile global economy and constantly evolving international tax rules, the control of related-party transactions (RPTs) is becoming a focal point for Vietnam’s tax authorities. A crucial training conference organized by the General Department of Taxation (GDT) on April 17-18 underscored the urgent need to enhance management effectiveness, prevent transfer pricing abuses, and ensure tax fairness. Businesses with RPTs must grasp these key updates to ensure compliance and minimize risks.

Why is Scrutiny on Related-Party Transactions Intensifying?

Speaking at the conference, Deputy Director General of the GDT, Mr. Dang Ngoc Minh, highlighted that 2025 continues to be a challenging year. Global geopolitical instability and trade tensions significantly impact investment and business operations.

Against this backdrop, transfer pricing schemes and tax avoidance practices among enterprises with RPTs are becoming increasingly complex and sophisticated. This is particularly evident through the misuse of intra-group pricing policies aimed at:

• Minimizing tax liabilities.
• Causing tax base erosion in Vietnam.
• Shifting profits abroad.

Mr. Minh emphasized that refining management mechanisms and strengthening tax audits for RPTs are not just procedural requirements but also crucial political tasks aimed at:

• Ensuring fairness and transparency in the business environment.
• Protecting state budget revenues.
• Maintaining a healthy investment climate.

Vietnam’s Proactive Integration: From BEPS to the Global Minimum Tax

Facing this reality, Vietnam has been proactively integrating with international tax standards:

1. BEPS Membership: Since 2017, Vietnam has been the 100th member of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), committing to implementing the four minimum standards. This includes Action 14 on more effective dispute resolution mechanisms through the Mutual Agreement Procedure (MAP) and promoting Advance Pricing Agreements (APAs). This provides greater stability and predictability for businesses regarding transfer pricing.
2. Global Minimum Tax (GMT): A major milestone was the National Assembly’s adoption of Resolution No. 107/2023/QH15 (dated November 29, 2023), applying a top-up corporate income tax according to the Global Minimum Tax rules (Pillar Two). The GDT is currently leading the drafting of the Decree guiding its implementation. This is a strategic measure to combat revenue loss and respond to the profit-shifting tendencies of multinational corporations.

Implementing these international commitments and rules demonstrates Vietnam’s determination to build a fair, modern tax system, enhancing national prestige.

Enhancing Practical Capacity: Expert Insights on RPT Tax Audits

The conference on April 17-18 was not just about policy updates but also served as a vital forum for tax officials nationwide to exchange practical experiences in auditing RPTs – one of the most complex areas of tax administration. Key topics included:

• Analyzing Transfer Pricing (TP) Documentation: Critical skills involve identifying and eliminating material differences and selecting the most appropriate TP method.
• Auditing Intra-group Service Fees: Focusing on items prone to transfer pricing abuse, such as shared management costs, royalties, technical support fees, etc.
• Utilizing Comparability Data: Techniques for effectively collecting and using information from reliable databases (industry, commercial, public sources) for benchmarking purposes.

Experience sharing from international experts (like JICA – Japan) and leading specialized units helps enhance the professional capabilities of tax officials, aiming for higher quality and more effective tax audits, especially for foreign-invested enterprises and multinational groups operating in Vietnam.

Moving Towards Transparency & Sustainability: What Should Businesses Do?

The conference reaffirms the Tax Authority’s commitment to tightening RPT management, ensuring financial discipline and state revenue.

For businesses, especially those with related-party transactions:

• Proactive Review: Re-evaluate your transfer pricing policies to ensure compliance with the arm’s length principle.
• Prepare Thorough Documentation: Prepare and maintain Transfer Pricing documentation as required by regulations.
• Stay Updated: Closely monitor new legal developments, particularly the upcoming Decree guiding the Global Minimum Tax.
• Seek Professional Advice: When necessary, consult with tax experts for tailored solutions and risk mitigation.

Proactive compliance not only helps businesses avoid risks of tax reassessments and penalties but also contributes to building a transparent and sustainable business environment in Vietnam.