Transfer pricing: new audit trends and opportunities from APA

Against this backdrop, seeking certainty through reactive application for bilateral and multilateral advance pricing agreements (BAPA and MAPA) represents a pivotal opportunity, shifting the conversation from defence to proactive risk management.

Vietnamese tax authorities have accelerated tax audit and inspections targeting enterprises engaged in RPTs. According to a Department of Taxation report, in the first half of 2025 alone, 119 enterprises with RPTs were audited, resulting in approximately VND600 billion (approximately $22.8 million) of additional tax and administrative penalties, VND3.579 trillion (approximately $135.9 million) in loss reduction, VND3.2 billion (approximately $121,531) of disallowed input VAT, and VND5.091 trillion ($193.7 million) in upward adjustments to taxable income. TP audits contributed roughly 60 per cent of these adjustments, with around VND360 billion (approximately $13.7 million) in additional tax payments, VND3.139 trillion (approximately $119.3 million) in reduced losses, and VND4.957 trillion (approximately $188.4 million) 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 towards examining the substance, value creation, and benefit testing of cross-border services.

Tat Hong Quan, tax partner and national transfer pricing leader of Deloitte Vietnam , said, "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.

First, enterprises are required to submit a 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.

Quan said, "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 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 predictability, thereby providing greater certainty, ability, 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 US, Japan, and South Korea, reflecting a modern shift towards cooperative compliance. In Vietnam, the mechanism was first introduced in 2013, however, it has only seen notable improvements in 2025, driven by updated regulations.

On June 11, the government issued Decree No.122/2025/ND-CP, which authorizes the Ministry of Finance to approve and admit 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 was honored with three prestigious awards at the International Tax Review Asia-Pacific Tax Awards 2025.

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

The awards are presented by the International Tax Review, 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 maintain the highest standards of client service and foster the sustainable growth of taxation.

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