Guiding method of determining the transfer price according to Decree No. 132/2020/NĐ-CP of Vietnam’s Government

According to the Decree No. 132/2020/NĐ-CP of Vietnam’s Government, method of determining the transfer price and the arm's length price is specified as follows:

- The transfer price of a product is adjusted to the arm’s length price of the product or the value within the standard arm's length range of independent comparables as prescribed in Decree No. 132/2020/NĐ-CP;

- In case where the product price is publicly announced on the domestic and international exchange of commodities or services, the transfer price of a product shall be determined according to the product price quoted at the comparable time and under the same or similar conditions;

- Taxpayers purchasing machinery or equipment from foreign related parties must provide records or documents evidencing purchase prices thereof in accordance with the arm’s length principle at the purchase time. For new machinery or equipment, the price used for comparison purposes is the price on the invoice demonstrating that the related party has purchased such machinery or equipment from an unrelated party. For used machinery or equipment of which the invoice or original document evidencing purchase is issued on the purchase date, revaluation thereof shall be subject to applicable legislation on guidance on management, use and depreciation of fixed assets.

Note: Transfer pricing results are the taxable prices used for declaring and determining the corporate income tax amounts payable on condition that they do not cause any reduction in taxpayers’ tax obligations to the state budget.

View more details at the Decree No. 132/2020/NĐ-CP of Vietnam’s Government, effective from December 20, 2020.

Thuy Tram

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