As tax authorities tightening transfer pricing management under Decree 132/2020/ND-CP (as updated by Decree 20/2025/ND-CP), FDI enterprises and global corporations are facing increasing compliance pressures. Failure to accurately declare these transactions not only leads to administrative penalties but also carries the risk of significant tax reassessment.
1. What are Related Party Transactions?
Related party transactions are transactions involving the purchase, sale, exchange, lease, rental, borrowing, lending, transfer, or assignment of goods and services; loans, lending, financial services, financial guarantees, and other financial instruments; the purchase, sale, exchange, lease, rental, borrowing, lending, transfer, or assignment of tangible and intangible assets, and agreements on the purchase, sale, or shared use of resources such as assets, capital, labor, and cost-sharing between related parties, except for business transactions involving goods and services subject to State price adjustments as per the Law on Prices.
2. When are Parties Determined to be Related?
Common cases for identifying related parties include:
- Directly or indirectly holding at least 25% of the contributed capital.
- Parent company – subsidiary relationships.
- Possessing the power to appoint or control the majority of the Board of Management.
- The authority to determine financial policies and business operations.
- Control by individuals sharing family relationships as defined by law.
In practice, foreign enterprises in Vietnam or group members often engage in transactions such as intra-group service fees, head office cost allocations, royalties, intra-group loans, or inter-company trading. When RPTs arise during the period, enterprises must review their statutory declaration obligations.
3. Common Errors and Associated Risks
Tax authorities frequently identify the following deficiencies during audits and inspections:
- Omission of Appendices: Failing to submit RPT Appendices alongside the Corporate Income Tax (CIT) finalization return.
- Data Inconsistencies: Information in Financial Statements does not align with the RPT Appendices or the Transfer Pricing Documentation (Local File/Global File).
- Lack of Supporting Documentation: Failing to prepare functional and risk analysis profiles or using inappropriate pricing methods despite having qualifying transactions.
Consequences: In the event of a tax reassessment, enterprises face not only CIT arrears but also cumulative late payment interest over multiple years, creating a sudden and massive financial burden.
KTC Tax Talk: Guidance on Declaring Related Party Transactions
To support enterprises in preparing for the tax finalization period, Russell Bedford KTC is hosting a sharing session focused on practical issues, featuring:
- Determining the appropriate arm’s length comparison method.
- Instructions for completing RPT Appendices.
- An introduction to the Advance Pricing Agreement (APA) mechanism and key considerations.
- A Q&A session regarding related party transactions.
EVENT DETAILS
- Format: Online via Zoom.
- Time: 10:00 AM – 12:00 PM, Thursday, 12 March, 2026.
- Speakers:
- Ms. Thai Van Anh (FCCA UK, CPA Vietnam) – Partner, KTC Audit Company Limited.
- Ms. Nguyen Thi Hanh – Tax Expert.
- Fee: Free of charge.
- Language: Vietnamese.
- Registration Link: https://forms.gle/uLFFe22dGWMMo8b2A.
Following registration, the meeting link will be sent via email on March 11, 2026.
For detailed consultancy on transfer pricing documentation and new regulations, please contact Russell Bedford KTC. Our experienced team of experts is ready to support your business.
