Significant Transfer Pricing changes have just been released that impact Vietnamese companies for their 2024 tax year.

Transfer Pricing in Vietnam in 2025 – Changes Impact 2024 Tax Year Finalisations

Specifically, Decree 20/2025/ND-CP, issued on 10 February 2025 and effective from 27 March 2025 for the 2024 tax year, introduces a number of key changes:

1. Revised Definitions of Related Parties

– Providers of credit or guarantees that are licensed credit instutions in Vietnam will no longer create a related party relationship by way of their issuance of loans or guarantees (other parties that are not licensed credit institutions are still impacted)
– De Facto management and control is now considered when determing related parties, essentially introducing a “substance over form” analysis for control.
– Independent branches are now specifically treated as related parties for declaration purposes

2. Updated Documentation

Along with ongoing obligations for preparing and maintining the Local File, Master file and Country-by-Country reports, Appendix 1 of Decree 132/2020/ND-CP has been updated for reporting related party relationships, which is required to be filed with 2024 tax finalisation reports.

3. Information Sharing with Authorities

Additional information is mandated to be shared between tax authorities and the State Bank regarding related parties, loans and management. This is with the intention of building a more complete picture of groups and their TP compliance/obligations, and provide better transparency within the banking system.

4. Excess Interest Deduction Restrictions Rolled Back

For taxpayers without any related party transactions, and which previously were capped at deducting interest above the 30% EBITDA cap, they can now deduct the balance of this previously capped interest tax deduction over subsequent periods.

The deadline for compliance with this new Decree is tight, given then 2024 corporate tax filing deadline (for most Vietnamese companies) is at the end of March 2025.