Receiving a transfer pricing adjustment decision from the tax authority usually means a significant corporate income tax reassessment, plus late-payment interest accruing daily. Many FDI enterprises find themselves cornered: the price was agreed with the overseas parent company, yet the Vietnamese tax authority has now redetermined it at a different level. The question is whether the enterprise has the right to object, and how to object in a way that stands a real chance of success.
The short answer: the law allows enterprises to file complaints and lawsuits against adjustment decisions, but throughout the complaint period the enterprise must still pay the full assessed tax, plus late-payment interest of 0.03% per day. The right strategy is therefore not to delay payment, but to build a rebuttal file proving compliance with the arm’s length principle.
The Current Legal Framework on Transfer Pricing Adjustments Since 01/7/2026
The first thing to update is that the entire legal framework on transfer pricing changed on 01/7/2026. Decree 255/2026/ND-CP, issued on 30/6/2026 and effective from 01/7/2026, fully replaced Decree 132/2020/ND-CP and Decree 20/2025/ND-CP — both of which have expired. Every citation in complaints and explanatory letters to the tax authority from this point on must be based on Decree 255/2026; Decree 132/2020 may no longer be cited as a valid legal instrument.
In parallel, the Tax Administration Law 108/2025/QH15, effective from 01/7/2026, is the general law on tax administration. Article 24.2.i sets out the cases in which the tax authority may assess tax on related-party transactions, Article 17.2.o provides for the obligation to pay tax during the complaint period together with the taxpayer’s right to complain and sue, and Article 30 provides for advance pricing agreements (APA) and the mutual agreement procedure (MAP).
When the Tax Authority May Adjust Transfer Prices
The tax authority’s power to make adjustments is set out in Article 21.3 of Decree 255/2026. Where an enterprise cannot demonstrate that its related-party transaction prices comply with the arm’s length principle, the tax authority may redetermine the taxable price. The pricing methods are prescribed in Articles 13, 14 and 15 of the Decree (the three method groups PP1, PP2 and PP3), and the tax authority will select the most appropriate method given the available comparable data.
Two points in Decree 255/2026 deserve attention for rebuttal purposes. First, Article 16 retains the cap on deductible interest expenses at 30% of EBITDA for related-party transactions — a ground the tax authority frequently invokes when adjusting the profits of enterprises with related-party borrowings. Second, a new point in Article 21.1.c: the tax authority is prohibited from using the country-by-country report (CbCR) as a basis for price adjustments. If the adjustment decision in your case shows signs of being based on CbCR data, this is a valuable rebuttal argument.
On documentation, Article 18 of Decree 255/2026 sets out the obligation to prepare transfer pricing documentation. This file is the enterprise’s most important shield: a complete file with a clear methodology and reliable independent comparable data will make it difficult for an adjustment decision to stand.
The Right to Complain and the Obligation to Pay During the Complaint
This is the point most enterprises misunderstand. Under Article 17.2.o of the Tax Administration Law 108/2025, taxpayers have the right to complain about and sue over tax administrative decisions, but must still pay the full tax amount stated in the decision during the complaint period, plus late-payment interest of 0.03% per day on the late-paid tax.
Complaint procedures follow the Law on Complaints 02/2011/QH13 (the 2026 consolidated version): the complaint limitation period is 90 days from receipt of the administrative decision (Article 9), and the time limit for first-instance complaint settlement is no more than 30 days from acceptance (Article 28). Enterprises should watch the 90-day mark carefully — missing it means losing the right to an administrative complaint, leaving only the court route with its own separate limitation period.
A word of caution: following the reorganisation of the tax authority apparatus, the competence to issue adjustment decisions may have changed from before. When receiving a decision, enterprises should carefully check the signatory’s authority and the issuing body stated on the specific decision, as this formal detail may affect the decision’s validity.
Rebuttal Strategy: Proving Arm's Length Compliance
The heart of every transfer pricing adjustment complaint lies in proving that the enterprise’s transaction prices comply with the arm’s length principle. Rebuttal arguments typically include:
First, reviewing the pricing method applied by the tax authority: whether it is the most appropriate method for the nature of the transaction, and whether the comparable data used is genuinely comparable in terms of functions, assets and risks.
Second, cross-checking against the enterprise’s own transfer pricing documentation under Article 18 of Decree 255/2026: if the file is complete and methodologically sound, the enterprise has grounds to request reconsideration.
Third, testing the adjustment against the new provisions of Decree 255/2026 that favour the enterprise, notably the prohibition on using CbCR for adjustments in Article 21.1.c.
Beyond the domestic complaint route, Article 30 of the Tax Administration Law 108/2025 opens the door to advance pricing agreements (APA) and the mutual agreement procedure (MAP) — particularly useful where a Vietnamese price adjustment creates a risk of double taxation for the group. However, detailed guidance on APA under the new legal framework is still being finalised, so enterprises should monitor updates before pursuing this mechanism.
Conclusion
A transfer pricing adjustment is not the end of the road. FDI enterprises have every right to complain about and sue over adjustment decisions under the Law on Complaints and the Tax Administration Law 108/2025, within the new framework of Decree 255/2026 effective from 01/7/2026. But remember the golden rule: a complaint does not suspend the tax payment obligation — the enterprise must still pay the full tax plus 0.03% daily late-payment interest while awaiting settlement. The outcome largely turns on the quality of the transfer pricing documentation and the ability to demonstrate arm’s length compliance.
If your enterprise has just received a transfer pricing adjustment decision or is preparing transfer pricing documentation for the new tax period, contact us for a file review and a tailored rebuttal strategy.
Disclaimer: This article provides general legal information based on the cited legal instruments and does not constitute legal advice for any specific case. Laws and implementing guidance may change; you should consult a lawyer before making decisions.
Content reviewed by the FLAW AI Legal Council; publication is pending owner approval — FLAT Law Firm’s AI-assisted legal review system. This is not a lawyer’s opinion and does not replace direct legal advice.