Analysis of the Impact of Transfer Pricing Regulations on SMEs: Opportunities and Challenges in the Context of the New Legal Framework.

In the context of global economic integration, transfer pricing regulations are increasingly being updated and refined to ensure transparency and fairness in profit allocation among affiliated companies. This not only has a direct impact on multinational corporations but also profoundly affects small and medium-sized enterprises (SMEs) – businesses that often face challenges related to resources, management systems, and access to financing.

The following article will provide a detailed analysis of the impact of transfer pricing regulations on SMEs in Vietnam, and offer practical solutions to help SMEs leverage opportunities and effectively navigate the legal challenges they face.

Overview of Transfer Pricing Regulations in Vietnam

Concept of Transfer Pricing

Transfer pricing refers to determining the value of transactions between affiliated companies. These transactions can include the sale of goods, provision of services, transfer of technology, loans, guarantees, and other financial dealings. The main goal is to ensure that profits are allocated appropriately between the parties, preventing profit shifting to avoid taxes.

Transfer pricing regulations in Vietnam are based on international standards such as the OECD guidelines but have specific elements tailored to the domestic economic and legal context. Notably, legal documents like Decree 132/2020/ND-CP and recently amended decrees (such as Decree 20/2025/ND-CP) have helped clarify the criteria for identifying related-party transactions and how to handle non-deductible interest expenses.

Recent Changes in Transfer Pricing Regulations

The new regulations focus on:

Clarifying the concept and criteria for identifying related parties: Amendments to points d, k, and the addition of point m aim to accurately define related-party transactions, particularly financial transactions such as loans and guarantees between businesses and credit institutions.
Adding responsibilities for the State Bank of Vietnam: The State Bank will collaborate in providing information and data to help tax authorities more effectively monitor related-party transactions.
Replacing Appendix I: The new reporting form enables businesses to fully and accurately declare their related-party transactions, reducing the risk of issues during tax inspections.
Transitional provisions for interest expenses: Adjustments have been made to the handling of non-deductible interest expenses from previous tax periods, allowing businesses to better optimize their financial costs.

Impact of Transfer Pricing Regulations on SMEs

SMEs are often faced with numerous challenges related to resources, management systems, and access to capital. While transfer pricing regulations aim to ensure transparency in related-party transactions, they also have multifaceted impacts on small and medium-sized enterprises.

Positive Impacts

Enhancing Transparency and Ensuring Tax Fairness

The requirement for SMEs to prepare related-party transaction documentation according to regulations helps create a clear and transparent accounting system. This:

Builds trust with tax authorities: Complete and accurate documentation allows businesses to demonstrate that their transactions are conducted based on arm’s length principles, helping avoid the imposition of transfer pricing adjustments that could affect their tax obligations.
Establishes credibility with investors: A transparent financial system builds strong trust with investors and partners, opening up opportunities for business collaboration, which in turn provides additional capital and support for growth.

Optimizing Financial Costs and Access to Capital

The new regulations allow businesses to avoid the limitations on deducting interest expenses that were previously imposed by caps:

Reducing cost pressure: The removal of constraints on loan transactions with commercial banks, when there is no control or management relationship, enables businesses to fully deduct interest expenses. This improves cash flow, reduces financial burdens, and creates favorable conditions for investment activities.
Enhancing access to financing: By not being forced to deal with complex reporting on related-party transactions, businesses can allocate more time and resources to focus on core operations, thereby improving their ability to access loans at preferential interest rates from financial institutions.

Driving Investment and Business Development

A transparent and fair tax management system serves as a motivation for businesses to invest in:

Technological innovation: When financial costs are optimized, SMEs can invest in technology, upgrade IT systems, and automate workflows, improving business efficiency.
Expanding production capacity: Improved cash flow allows businesses to more easily access capital to scale up production, enhancing their competitiveness in both domestic and international markets.

Negative Impacts and Challenges

Initial Investment Costs and Staff Training

Complying with the new transfer pricing regulations requires SMEs to:

Invest in IT systems and management software: Businesses need to upgrade their storage and reporting systems to meet the requirements of the new Appendix I form. This represents a significant initial investment, particularly for businesses with limited resources.
Train personnel: The accounting, finance, and legal teams need to undergo specialized training to understand and properly apply the new regulations, ensuring that related-party transaction documentation is prepared accurately and comprehensively.

Risks of Non-Compliance with Regulations

Difficulties in preparing related-party transaction documentation: If a business fails to complete the documentation as required, it faces the risk of having tax authorities impose transfer pricing adjustments, leading to increased tax liabilities and potential penalties.
Legal risks and tax disputes: Errors in the declaration and storage of information can lead to disputes with tax authorities, negatively affecting the business's reputation and operations.

Challenges in Internal Management and Technology Integration

Data synchronization and reporting: SMEs often lack integrated management systems, making it difficult to efficiently collect and process data on related-party transactions.
Digital transformation: Implementing new technological solutions for data management and reporting requires businesses to invest in new processes, change workflows, and train staff—challenges that can be hindered by costs and time constraints.

Expert Opinion: Opportunities and Challenges for SMEs

According to leading experts in the fields of taxation and business management, the new transfer pricing regulations not only present challenges but also open up many opportunities for SMEs. “While these regulations may initially create difficulties due to documentation and technological requirements, in the long run, they will help businesses enhance transparency, optimize financial costs, and improve competitiveness,” said Mr. Nguyen Thanh Lam, Partner of RSM Vietnam, Director of RSM Hanoi.

Mr. Lam emphasized that, “With an updated and more transparent legal system, SMEs will have more opportunities to access loans at preferential interest rates, which will support increased investment and expansion of production activities. However, to fully leverage these benefits, businesses need to invest in technology and staff training to ensure that all documentation and reports are accurate and complete.”

These insights suggest that, despite certain risks, with careful preparation and proactive implementation, SMEs can turn challenges into opportunities for sustainable growth.

Response Strategies and Solutions for SMEs

To minimize the negative impacts and maximize the benefits of transfer pricing regulations, SMEs need to implement the following response strategies:

Review and Update Related-Party Transaction Documentation

Regular internal audits: Establish a mechanism for periodically reviewing related-party transactions to ensure that the documentation and supporting evidence are always up to date and compliant with legal requirements. This helps detect errors early and allows for timely corrections.
Use standardized reporting templates: Apply the new Appendix I template under Decree 20/2025/ND-CP for related-party transaction reporting. This not only ensures compliance with regulations but also minimizes the risk of issues during tax audits.

Training and Enhancing Employee Capabilities

Specialized training: Organize internal training sessions for the accounting, finance, and legal teams on the new transfer pricing regulations. This training helps employees gain accurate knowledge and apply it correctly in practice.
Collaborating with consultants: SMEs should seek support from tax and auditing experts to gain a comprehensive understanding and receive specific guidance on preparing related-party transaction documentation.

Applying Technology and Upgrading Management Systems

Investing in IT systems: Implement financial management software and electronic storage systems to automate reporting processes, minimize errors, and strengthen internal controls. This is a necessary investment to comply with the new regulations.
Data integration: Build a system to integrate data from different departments (accounting, finance, HR) to create a unified database, supporting efficient analysis and preparation of related-party transaction reports.

Legal Consultation and Support

Utilize professional consulting services: SMEs can collaborate with consulting firms, auditing companies, and tax lawyers to receive support in adjusting related-party transaction systems and ensuring compliance with legal regulations.
Participate in workshops and industry events: Attending workshops, training courses, and industry events helps businesses stay updated with the latest information, exchange experiences, and learn optimal solutions from leading experts.

Conclusion

The new transfer pricing regulations, in the context of global economic integration and the continuous growth of businesses, present both opportunities and challenges for SMEs in Vietnam. While these regulations require businesses to invest in IT systems, train staff, and review all related-party transactions, in the long term, they will enhance transparency, optimize financial costs, and facilitate access to financing at preferential interest rates.

According to experts, if SMEs proactively adopt technology, collaborate with consultants, and continuously update internal systems, they will not only meet legal requirements but also turn challenges into growth opportunities. This will contribute significantly to building a healthy, competitive, and sustainable business environment, while also paving the way for Vietnam’s economic growth.

Ultimately, complying with transfer pricing regulations is not only a legal obligation but also an opportunity for SMEs to improve financial management, optimize tax costs, and enhance their competitiveness in the market. Businesses must recognize the value of a transparent management system and proactively invest in and implement modern solutions to grow stronger in the future.