A Chinese group with subsidiaries in Vietnam, India and China faces three different transfer-pricing documentation regimes — different thresholds, forms and deadlines. Three disconnected packs are costly and risk data contradictions; one “universal” pack satisfies no country’s specifics. This article compares the three documentation requirements and shows how to build a unified yet country-compliant documentation system — the only sustainable approach for a multinational group.
Vietnam: three documentation tiers under Decree 132/2020/ND-CP
Decree 132/2020/ND-CP requires enterprises with related-party transactions to prepare related-party transaction pricing documentation in three OECD BEPS Action 13 tiers: the Local file — detailing Vietnamese related-party transactions with comparability analysis; the Master file — the group picture (organisation, value chain, global TP policy); and the Country-by-Country report (CbCR) — for groups above the consolidated-revenue threshold. Documentation must be ready before the annual CIT finalisation filing and produced on tax authority request. Vietnam’s distinctive feature: the related-party interest deduction cap (EBITDA ratio) — the TP analysis must tie into this computation.
China: three contemporaneous files
China requires contemporaneous documentation in three parts: the Master file (group-wide), the Local file (China transactions), and the Special file — the biggest difference from Vietnam. The Special file covers cost contribution arrangements and thin capitalisation. Revenue thresholds for each file type are prescribed in detail — enterprises self-determine which apply. China’s tax authority (STA) is known for in-depth TP audits, especially on outbound service fees and royalties — documentation must prove the Chinese party’s benefit test.
India: Master file, Local file and “safe harbours”
India follows a similar three-tier BEPS framework, distinguished by its safe harbour mechanism — prescribed safe profit margins for certain transaction types (IT services, support services, and the like). If a transaction’s margin falls within the safe harbour and the enterprise opts in, the Indian authority accepts it without adjustment — materially reducing dispute risk. But safe harbours cover only listed transaction types, not a blanket pass.
A unified documentation strategy for the three-country group
Tier 1 — one shared Master file: build a single OECD-standard group Master file for all three countries (translated as required) — the backbone ensuring consistency. Tier 2 — country Local files: one per country, since transactions, comparables and detailed rules differ — but underlying figures (revenue, costs, profits) must reconcile across files. Tier 3 — country quirks: China’s Special file (cost contribution, thin cap), Vietnam’s EBITDA analysis, India’s safe harbour assessment. Golden rule: one truth — one dataset — three presentations. Cross-country data contradictions are a “gift” to tax authorities exchanging information (CbCR and the MAAC enable data sharing).
Keeping the system alive year after year
Documentation is not a one-year project. First, calendarise it: each country’s preparation deadline, translation lead time and filing date go into one group TP calendar owned by regional tax. Second, refresh the comparables: benchmark studies age quickly — update the comparable sets annually rather than rolling forward stale analyses that collapse under audit. Third, link documentation to reality: when the business changes (new related-party flows, restructured supply chains, new service charges), the TP policy and files must change with it — a file describing last year’s business is worse than useless in an audit of this year. Fourth, rehearse the defence: the group should be able to explain its TP story — value creation, functions, risks — consistently in Hanoi, Beijing and New Delhi, because under information exchange, the three authorities may well compare notes. A living documentation system turns TP from an annual scramble into a standing capability. Assign one owner for the TP file across all three jurisdictions — scattered ownership is how inconsistencies creep in, and inconsistencies are what auditors live for. Update it quarterly, not annually; memories of intercompany transactions fade faster than you think, and contemporaneous notes beat reconstructed ones every time. And brief the board annually on the TP position — directors who understand the transfer-pricing risk defend the documentation budget without being asked.
Lessons from the USD 480M Phu Tho battery project — reading the “precedent”
Why do big projects get the “red carpet”?
The USD 480M battery project in Phu Tho is a provincial high-tech FDI “flagship” — and flagships get special treatment: dedicated task forces, site-clearance timeline commitments, infrastructure support. Lesson for investors: the bigger and higher-tech the project, the stronger your negotiating leverage with localities (incentives, infrastructure, timelines). Don’t be shy: bringing a big project, negotiate a total support package (land, power, labour, procedures) — the locality wants your project no less than you want their land.
The “unwritten” conditions of battery projects — beyond licences
(1) Power: battery plants are electricity “monsters” — secure written power commitments (capacity, price, roadmap) from the power sector before breaking ground. (2) Environment: batteries are high environmental-risk — EIAs and environmental permits are stringent; do them properly from the start (never “for show”). (3) Technical labour: Phu Tho isn’t a battery-engineer “capital” — plan training/transfers (Chinese specialists in + local training). (4) Supply chain: imported battery materials — model logistics and warehousing (near ports? near borders?).
Replicating success — the next battery project’s checklist
(1) Pick localities “hungry” for high-tech FDI (maximum leverage); (2) negotiate a total package (land + power + labour + procedures), not item by item; (3) written power commitments pre-construction; (4) thorough EIA from day one; (5) a 3-year technical staffing plan (specialists + training); (6) design supply chains (logistics, warehousing) alongside plant design. Principle: battery projects succeed not from big capital — but thorough preparation.
Three-country documentation — one effort, three filings
Quick compare: transfer-pricing documentation in Vietnam (3 tiers: master/local/CbC — Decree 132/2020) vs China (similar 3 tiers — but different forms and thresholds) vs India (master/local + separate reports, lower thresholds). Common ground: all three follow OECD standards — doing it well in one country means 60–70% reusable elsewhere. Differences: language (Vietnamese/Chinese/English), filing deadlines, and each tax authority’s “taste” in scrutiny.
Building a regional documentation hub
Instead of three separate advisers producing three inconsistent files, build a regional hub: (1) one master file (group value chain — single version, translated); (2) coordinated local files (same functional analysis, same method selection logic — localised comparables); (3) consistent narratives (the story of who does what must match across all three — contradictions between filings are audit gold for tax authorities sharing information). Governance: one regional owner (group tax), annual refresh cycle, change log (business changes → documentation updates). Cost is higher upfront; audit defence is incomparably stronger.
Three-country TP documentation checklist
(1) Determine each country’s documentation thresholds under current rules (revenue, transaction values); (2) build one unified group Master file; (3) prepare country Local files — Vietnam (with EBITDA analysis), China (with Special file if applicable), India (safe harbour assessment); (4) cross-reconcile figures across files; (5) complete before each country’s filing/finalisation deadline; (6) store and update annually; (7) keep an “audit defence pack” ready (benefit test, comparables). Reminder: thresholds and forms change yearly — recheck before each documentation cycle.
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This article has been quality-reviewed by the FLAW AI Legal Council
