Possibly — but one thing must be clear from the outset: transfer pricing is not a crime. “Transfer pricing” is essentially the pricing of transactions between related parties; the law requires compliance with the arm’s length principle and with declaration and documentation obligations. Only where mispricing involves intentional deceit aimed at tax evasion and reaches statutory thresholds can it constitute tax evasion (Article 200 of the Penal Code). This article draws the line between transfer pricing that stops at administrative handling and transfer pricing that touches criminal liability.
The current legal framework: Decree 255/2026/ND-CP
Decree 255/2026/ND-CP on tax administration for enterprises with related-party transactions was issued on 30 June 2026, effective from 1 July 2026, applying from the 2026 corporate income tax period. It has entirely replaced Decree 132/2020/ND-CP and Decree 20/2025/ND-CP (both expired 1 July 2026).
Its enabling statute is Law 108/2025/QH15 on Tax Administration (effective 1 July 2026; replacing Law 38/2019/QH14) — Clause 5, Article 52 assigns the Government to detail tax administration for related-party transactions. Notable new points:
- The exemption threshold for preparing the Related-Party Transaction Pricing Dossier is raised to below VND 500 billion (Point c, Clause 2, Article 20);
- The country-by-country reporting (CbCR) threshold moves to EUR 750 million per OECD standards (Article 19);
- The catalogue of pricing methods at Articles 12–15: (1) comparable uncontrolled price method; (2) comparable profit margin method; (3) profit split method.
Note: the old five-method catalogue should not be applied without checking the new text.
When does transfer pricing stop at administrative handling?
This is the most common scenario. Where the tax authority determines that related-party pricing does not follow the arm’s length principle, the measures applied are:
- Tax assessment (an dinh thue) — an administrative tax-management measure under Law 108/2025 and Decree 255/2026;
- Back-tax collection of the shortfall;
- Administrative sanctioning for tax violations.
Disputes over valuation methodology and results for related-party transactions — inherently estimative and technical — ordinarily lead only to administrative tax assessment, not criminal proceedings.
When can transfer pricing trigger criminal prosecution?
The criminal route opens where two elements coincide:
1. Subjective element: intentional deceit. Not every pricing deviation is a crime. Deceitful intent must be proven, e.g.: fabricating transfer-pricing documentation; concealing related-party transactions; misrepresenting the nature of transactions; using false vouchers; maintaining two sets of books. Mispricing from genuine professional disagreement or inadvertent error does not constitute a crime.
2. Quantitative element: reaching Article 200 thresholds. The evaded tax must reach prosecution thresholds: VND 100 million or more for individuals; VND 200 million or more for commercial legal entities (Clause 5, Article 200; Article 200 falls under Article 76 of the Penal Code, so companies may be prosecuted).
Technically, deceitful transfer pricing is usually pursued through Clause 1, Article 200, specifically:
- Point d: “using unlawful invoices or vouchers to account for input goods or materials… reducing tax payable”;
- Point dd: “using other unlawful vouchers or documents to incorrectly determine tax payable.”
Sentencing: individuals up to 7 years’ imprisonment; commercial legal entities fines up to VND 10 billion or suspension of operations.
The administrative ↔ criminal boundary = intentional deceit + monetary threshold. Missing either element, the case stays administrative. With both present, the tax authority transfers the file to the Investigation Agency under Clause 5, Article 22 of Law 108/2025 and Decision 489/QD-TCT/2022.
Additional note: Article 221 may also apply
Beyond tax evasion (Article 200), falsifying records and books relating to related-party transactions may also constitute the crime of violating accounting regulations (Article 221 of the Penal Code) where its elements are met — and this offence pursues only individual liability (not legal entities).
Practical defences for companies with related-party transactions
- Prepare a complete Related-Party Transaction Pricing Dossier under Decree 255/2026 — the single most important “shield,” reducing both tax-assessment risk and serving as evidence negating intentional fault if criminal questions arise.
- Consider concluding an APA (advance pricing agreement) with the tax authority to lock in valuation-methodology risk in advance.
- Retain full documentation and analyses proving arm’s length pricing; the more complete the file, the harder to infer deceitful intent.
- Never use false vouchers, conceal related-party transactions, or maintain two sets of books — these are precisely the signs that move a case from administrative to criminal.
Frequently asked questions
Is transfer pricing a criminal act?
No. Transfer pricing is the pricing of intra-group transactions between related parties, entirely lawful when following the arm’s length principle and declaration duties. Only deceitful price manipulation aimed at tax evasion may constitute tax evasion.
Does a transfer-pricing tax assessment lead to prosecution?
Ordinarily no. Tax assessment is an administrative measure. Only where intentional deceit is proven and the evaded tax reaches Article 200 thresholds is the file transferred to investigators.
Is Decree 132/2020 on related-party transactions still in force?
No. Decree 132/2020/ND-CP and Decree 20/2025/ND-CP expired 1 July 2026, replaced by Decree 255/2026/ND-CP (effective 1 July 2026, applying from the 2026 CIT period).
What should FDI companies do to reduce risk?
Prepare a complete pricing dossier under Decree 255/2026, consider an APA, and keep documentation proving arm’s length pricing — reducing assessment risk while evidencing the absence of intentional fault.
References
- Decree 255/2026/ND-CP on tax administration for related-party transactions (issued 30 June 2026, effective 1 July 2026; replacing Decrees 132/2020/ND-CP and 20/2025/ND-CP).
- Clause 5, Article 52 of Law 108/2025/QH15 on Tax Administration (effective 1 July 2026).
- Article 200 (Clause 1, Points d and dd; Clause 5), Article 76 and Article 221 of the 2015 Penal Code.
- Clause 5, Article 22 of Law 108/2025/QH15; Decision 489/QD-TCT/2022 (file-transfer mechanism to investigators).
See also: Related-party Transactions in Companies in Vietnam · Tax Compliance for Chinese Companies in Vietnam
FLAT Law Firm assists FDI companies in preparing transfer-pricing dossiers, negotiating APAs, and handling tax-assessment disputes, including criminal-exposure assessment. Contact us via our contact page.
This article is for general reference only and does not constitute legal advice. Each specific case should be assessed based on its actual records and the laws in force at the time of application.
For reference only, not legal advice. Content quality-checked by the AI Legal Council; not yet reviewed by a human lawyer.
