Asia Transfer Pricing Brief: Q3 2025

Posted by Written by Abby Yang Reading Time: 14 minutes

In our Asia Transfer Pricing Brief for Q3 2025, we highlight the latest transfer pricing developments across Asian markets:

  • Macao SAR promulgated its first formal transfer pricing framework through the Implementation Rules on Transfer Pricing on August 25, 2025.
  • Vietnam issued Protocol No. 122/2025/ND-CP on June 11, 2025, revising the authorization process for advance pricing arrangements within its tax administration system.
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Macao SAR issues implementation rules on transfer pricing

On August 25, 2025, the Government of the Macao Special Administrative Region (hereinafter referred to as the” Macao SAR”) officially promulgated the Implementation Rules on Transfer Pricing (Administrative Regulation No. 11/2025), marking a significant step toward formalizing its transfer pricing framework.

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The Implementation Rules clarify and expand on the transfer pricing provisions in the Tax Code and the Provisional Regulations on Complementary Tax on Profits. They provide specific guidance on the application of the arm’s length principle, transfer pricing adjustments and applicable methods, requirements for maintaining controlled transaction information (transfer pricing compliance documentation), and advance pricing arrangements (hereinafter referred to as “APA”).

The issuance of the Implementation Rules is a significant milestone in guiding both the Macao SAR Financial Services Bureau and taxpayers in areas such as compliance filing for related-party transactions, application of transfer pricing methods, assessment and adjustment of controlled transactions, and the application, negotiation, and oversight of APAs.

Types of controlled transactions and definition of related parties

The Implementation Rules further clarify the scope of application of Macao SAR’s transfer pricing regulations and elaborate on the categories of related-party transactions and the definition of related-party relationships.

Based on Article 43-A of the Statute on Complementary Tax on Profits, the Implementation Rules specify that transfer pricing regulations apply to commercial or financial transactions (i.e., “controlled transactions”) between taxpayers in Macao SAR and their related parties in other tax jurisdictions. These transactions include:

  • Commercial transactions involving tangible assets, intangible assets, rights, or services as the subject matter.
  • Financial transactions (including lending, centralized fund management, hedging operations, guarantees, insurance, and so on).
  • Corporate restructuring or reorganization transactions (including those involving asset transfers or compensation).

It should be noted that transaction arrangements between related taxpayers within Macao SAR fall outside the scope of transfer pricing supervision.

Related-party relationships

Building on Article 43-B of the Statute on Complementary Tax on Profits, the Implementation Rules define eight scenarios that constitute a related-party relationship, providing more guidance for practical operations. These scenarios include:

  • Entities and individuals that hold, directly or indirectly, no less than 50percent of the shareholding or voting rights.
  • Rules concerning the appointment of directors and members of the administrative authority.
  • Spousal relationships or lineal blood relative relationships.
  • Specific requirements for other de facto control relationships.

Provisions on transfer pricing analysis procedures and adjustment methods

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In accordance with the “arm’s length principle”, the Implementation Rules expand on the principles of controlled transaction analysis and the application rules of transfer pricing methods, and clarify the specific requirements for comparable transactions, comparability analysis, and the adjustment of differences. In addition, the Implementation Rules clearly outline the comparability analysis procedures that the Finance Bureau should adopt to assess the reasonableness of controlled transactions of taxpayers, and provide detailed guidelines for the Finance Bureau to adopt the “indirect assessment method” to adjust the tax calculation basis of taxpayers. At the same time, the Implementation Rules clarify how to address potential double taxation arising from cross-border controlled transactions and specify the relevant application process.

  • Principle of controlled transaction analysis: It is emphasized that each controlled transaction needs to be analyzed separately in accordance with the arm’s length principle. The combined analysis of two or more related party transactions is only applicable to situations where 1) related party transactions are closely connected or continuous, and their separate analysis will lead to the loss of function and value of the transaction; 2) high costs are involved; and 3) there are no comparable transactions, and it is difficult to determine the transaction price.
  • Definition of comparable transactions: When testing and comparing uncontrolled transactions with controlled transactions as “comparable transactions”, the conditions that should be met include: 1) the transactions are substantially identical (similar or sufficiently similar in economic characteristics); and 2) the differences between transactions or between participating entities do not significantly affect the terms and conditions agreed, accepted and implemented under normal market conditions (or if they do, the impact of such differences can be eliminated through effective adjustments). Taxpayers need to analyze the facts and circumstances of each transaction to determine the substantial impact of differences in economic characteristics on comparability indicators and to determine the adjustments needed to eliminate the relevant effects.
  • Comparability analysis and comparability factors: Before determining the transfer pricing method, the taxpayer needs to conduct a comparability analysis, including: accurately defining the controlled transaction, identifying and comparing the terms, conditions and relevant economic characteristics of the controlled transaction and the unrelated comparable transaction, and the comparability analysis should be based on the actual execution terms and conditions of the controlled transaction. In addition, the Implementation Rules list the factors that should be considered in the comparability analysis, including: 1) the characteristics of the assets, rights or services that are the subject of the transaction and may affect the transaction price; 2) the functions performed by the participating entities, the risks they bear and the assets used; 3) Contractual terms and conditions, express or implied, that stipulate the liability, risk and profit distribution between the parties to the transaction; 4) the economic environment of the market in which each party operates; 5) business strategies that may affect the normal behavior and operation of the enterprise, and 6) other relevant important characteristics, such as the influence of public decision-making, the existence of geographical or synergistic advantages, etc. The Implementation Rules require taxpayers to make comparability adjustments in accordance with the rules to eliminate substantive differences between controlled and uncontrolled transactions and improve the reliability of comparability analysis.
  • Comparability analysis procedure and the most appropriate transfer pricing method: The comparability analysis procedure should consider a wide analysis of the business background of the transaction party, including the transaction period, business background, functions undertaken by the parties to the transaction, risks and asset conditions, etc., select the most appropriate transfer pricing method and indicators, and make comparability adjustments where appropriate. In view of the transfer pricing methods listed in Article 43-E of the Income Supplementary Tax Charter, the Implementation Rules provide additional detail on the specific applicable conditions of various methods, as well as their calculation formulas and financial indicators, including comparable uncontrolled price method, resale price method, cost-plus method, transaction profit split method or transaction net profit method, and other transfer pricing methods that can better reflect the matching relationship between profits and the place where economic activities occur and value are created. At the same time, the Regulations specify that the most appropriate transfer pricing method should be the one that provides the best and most reliable estimate of the terms and conditions reached in the arm’s length case, as well as the method that provides the best quality and quantity of comparable information for controlled and uncontrolled transactions and related entities, and involves the least comparability adjustments.

The Financial Services Bureau of the Macao SAR (hereinafter referred to as the “Financial Services Bureau”) will verify whether the controlled transactions between taxpayers and their related parties comply with the arm’s length principle through a comparability analysis procedure. If it is found that the arm’s length principle is not met, the Financial Services Bureau may adjust the tax basis of the taxpayer by using the “indirect assessment method” in accordance with the provisions of Article 1 of Paragraph 43-C of the Income Supplementary Tax Regulations and with reference to the above-mentioned transfer pricing method.

The adjustment of the tax basis of the Financial Services Bureau will follow two key rules:

  • Application of the quartile statistical method and reference median standard: Based on the average range of comparable transaction prices or profits in the last three years, the median value is selected according to the quartile statistical method. If the controlled transaction price or profit is lower than this median value, it needs to be adjusted to no less than the median level to ensure that the transaction pricing is consistent with the level of independent third-party transactions.
  • Adjustment year attribution: The tax calculation basis adjustment results need to be included in one or more tax years affected by controlled transactions to avoid cross-year tax base confusion.

In view of the possible double taxation of cross-border controlled transactions of taxpayers, the Implementation Rules propose two solutions and related application processes:

  • Corresponding adjustment mechanism: If the Macao SAR has signed a double taxation avoidance agreement or arrangement with another tax jurisdiction, the Financial Services Bureau may decide whether to adjust the tax basis of the taxpayer entity accordingly based on the adjustment of the tax basis of the tax jurisdiction to which the taxpayer’s related party belongs, and in light of the actual transaction facts.
  • Application for mutual consultation procedures: If the overseas tax authorities have adjusted the tax basis of related parties or decided to initiate the adjustment procedure, the taxpaying entity may apply in writing to the Finance Bureau of the Macao SAR to initiate the mutual consultation procedure. The application must be accompanied by documents such as the identification of the taxable entity and related parties, a description of the transaction facts, the year of taxation, relevant laws and regulations, and the dispute resolution measures taken. The Financial Services Bureau will complete the preliminary analysis within 30 days after receiving the written application and will initiate communication with the overseas tax authorities at the same time.

Regulations on the retention and declaration of controlled transaction data

On the basis of Article 43-D of the Income Supplementary Tax Charter, the Implementation Rules introduce a tiered approach to the storage, preservation, and submission of annual controlled transaction data, and clarify the retention period and submission requirements of the data. According to the total amount of annual controlled transactions and transaction types, taxpayers need to classify and store information, and certain storage obligations may be waived if the threshold is not reached.

Overview of the Preparation Threshold and Content of Controlled Transaction Information
Controlled transaction summary table Filing threshold When the total annual amount of controlled transactions reaches MOP 10 million, the taxpayer shall submit the Summary Table of Controlled Transactions to the Macao SAR Financial Services Bureau at the time of filing the annual Complementary Tax on Profits Return.
Core content 1. The types and amounts of controlled transactions with related parties during the year

2. Names of related parties, their respective tax jurisdictions, and tax identification numbers
Country-by-country report filing form Filing threshold The consolidated group revenue of the multinational enterprise group reaches MOP 7 billion.
Core content Information on the revenue, profits, and tax payment amounts of the multinational enterprise group in each tax jurisdiction where it conducts business operations, as well as specific operating activity indicators.
Master file Retention threshold A master file must be prepared if any of the following conditions are met:

1. The total annual amount of controlled transactions exceeds MOP 1 billion.

2. There are cross-border controlled transactions in the year, and the enterprise group to which the ultimate parent entity of the consolidated taxpayer’s financial statements belongs has already prepared a master file.
Core content Information including an overview of the group’s organizational structure, a description of the group’s business (covering key factors driving the group’s profit generation, an overview of the supply chain for the top five products or services by revenue contribution to the group, important service arrangements, an analysis of the value contribution and functions of the group’s member entities, etc.), intangible asset arrangements, the group’s financial and financing arrangements, and consolidated financial statements.
Local file Retention threshold A local file must be prepared if any of the following conditions are met:

1. The transfer of tangible assets exceeds MOP 200 million

2. The transfer of financial assets exceeds MOP 100 million.

3.  The transfer of intangible assets exceeds MOP 100 million.

4.  The total amount of other controlled transactions exceeds MOP 40 million.
Core content Basic enterprise information (including business unit structure, business description, key competitors, etc.), information on various types of controlled related-party transactions (including transaction background, category, amount, related parties, etc.), functional and risk analysis, selection and analysis of transfer pricing methods, and financial information.
Other transfer pricing documents Cost contribution arrangement In cases involving a Cost Contribution Arrangement (CCA), the taxpayer shall additionally prepare the following documents and information:

1. The Cost Contribution Arrangement;

2. Other agreements related to the CCA that are entered into by all parties for the purpose of implementing the CCA; and

3. The outcomes of the parties’ use of the arrangement, as well as the payment amounts and payment methods.
Intragroup services In cases related to the provision of intragroup services, the taxpayer shall prepare the following documents and information:

1. Written contracts and agreements for the services;

2. The group’s overall policy for centrally providing services to group members;

3. The type and content of the services provided, the service provider and recipient, and the location where the services are provided;

4. The actual or expected benefits of the service recipient;

5. The structure for providing the services (e.g., a central service entity or other service entities within the group);

6. The cost calculation system used to determine the total cost base (in particular, the method for allocating indirect costs);

7. The method for formulating profit distribution standards and the explanation of the rationale for the applicability of the profit margin; and

8. Audit policies, billing systems, intragroup service provision systems, settlement periods, and payment methods, as well as adjustments for differences between budgeted and actual costs.

Retention period and submission requirements

  1. Preparation period and language requirements: Taxpayers shall have all important transfer pricing-related documents prepared within nine months from the end of each financial year. If the documents submitted by the taxpayer are not in any of the official languages (Chinese or Portuguese), a translated version must be attached, unless the Financial Services Bureau confirms that the original language can be directly understood. If the Financial Services Bureau requires the enterprise to provide the aforesaid controlled transaction materials, such materials shall be submitted within 15 days.
  2. Retention period: All controlled transaction materials shall be retained for seven years from the end of the financial year, during which the completeness and traceability of the materials must be ensured. In the event of a merger or division of the enterprise, the successor entity shall assume the retention obligation.
  3. Consequences of non-compliance: Failure to retain or submit materials as required may result in a fine of MOP 10,000 to MOP 100,000 (approximately US$1,248 to US$12,480). In case of intentional non-compliance, the fine shall be increased to MOP 100,000 to MOP 200,000 (approximately US$12,480 to US$24,960).

Advance pricing arrangement

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Macao SAR introduced the APA mechanism for the first time in the Statute on Complementary Tax on Profits. Taxpayers with an annual total amount of controlled transactions exceeding MOP 40 million (US$4,992,000) may apply to and sign an APA with the Financial Services Bureau (FSB) for controlled transactions in future years. The Implementation Rules further specify the details of the application and implementation procedures for unilateral APAs. By signing an APA with the FSB, taxpayers can obtain future tax certainty and reduce the risk of transfer pricing adjustments in the future.

(I) Scope of application and term of APA

  1. Applicable transactions: Applicable to taxpayers signing unilateral APAs with the FSB. The FSB may still adjust and supervise the taxpayer’s controlled transactions that fall outside the scope of the APA.
  2. Term setting: The maximum validity period of an APA shall not exceed five years. Taxpayers may apply for retrospective application to the two tax years prior to the date of signing the arrangement, provided that the tax calculation basis for the retrospective years has not yet been determined.

(II) Application process and fees

The negotiation procedure is divided into three phases:

  • Application phase: The taxpayer shall submit an application to the FSB, together with relevant materials, including but not limited to: the years for which the APA is intended to apply; related parties and controlled transactions involved; the organizational and management structure of the taxpayer and its affiliated group; business conditions, financial accounting and audit reports of the past five years; description of functions and risks of the involved related parties; proposed transfer pricing method; value chain analysis; description of market conditions; business scale, profit forecast and planning for the years to which the APA applies; and relevant laws and regulations of the industry at home and abroad.
  • Analysis and evaluation phase: The FSB will analyze materials such as the function and risk status of the controlled transactions involved in the APA; data on comparable transactions and controlled transactions; transaction pricing and calculation methods; value chain contributions; transaction price or profit standards; assumptions; and the taxpayer’s intention for retrospective application of the APA to previous years.
  • Negotiation and signing phase: The content of the APA shall be formulated based on the consensus reached between the FSB and the taxpayer during the negotiation procedure. The text shall clearly specify: the taxpayer and its related parties covered by the APA; the applicable years; pricing and calculation methods; definitions of terms related to the application of methods and calculation bases; assumptions and the obligation to notify of changes thereto; obligation to submit annual reports; terms and conditions for fulfilling the APA; the term of the APA; and circumstances leading to its modification or termination.

If a taxpayer has been fined for tax violations in the past three years, failed to retain necessary transaction materials, or submitted an application that does not comply with the arm’s length principle, the FSB has the right to reject the application. If the taxpayer or its related parties fail to provide necessary data for analyzing and evaluating the APA, provide false or incomplete data, or exhibit other non-cooperative behaviors, the FSB may suspend or terminate the APA negotiation procedure. If the taxpayer requests to suspend or terminate the APA negotiation procedure, it shall submit a written application and explanation of reasons to the FSB.

Fee standard: The application fee for each APA is calculated at 0.2 percent of the total transaction amount, with a maximum cap of MOP 200,000 (approximately US$24,960). If the FSB confirms that the taxpayer’s APA application complies with the arm’s length principle, it shall notify the taxpayer to pay the fee within 60 days. Once paid, the fee is non-refundable

(III) Implementation and supervision of APA

  1. Obligation to submit annual reports: If a taxpayer signs an APA, it shall be exempted from preparing the local file for the controlled transactions covered by the APA. The taxpayer shall submit an annual report on the implementation of the APA to the FSB within 7 months after the end of each tax year, explaining the taxpayer’s actual business operations, the validity of assumptions, and the performance of terms. In case of any material changes affecting the APA (such as adjustments to transaction models or significant changes in the market environment), the taxpayer shall submit a written report on the extent of the impact within 30 days after the occurrence of such changes.
  2. Termination and renewal: An APA shall automatically become invalid upon the expiration of its validity period. An enterprise may apply for renewal within 90 days before the expiration and shall submit the latest implementation report and transaction forecast for future years. If the taxpayer submits false materials or fails to fulfill the terms of the APA, the FSB has the right to revoke the APA and reassess the tax calculation basis in accordance with the transfer pricing adjustment rules

Vietnam Issues Protocol No.122/2025/ND-CP on APA approval reform

On June 11, 2025, the Vietnamese government issued Protocol No.122/2025/ND-CP (hereinafter referred to as “Protocol No.122”), introducing significant reforms to the approval process for bilateral and multilateral APAs. The decree, effective July 1, 2025, aims to streamline tax administration by decentralizing authority and enhancing procedural efficiency.

Key changes introduced

Delegation of approval authority

Under Article 41, Paragraph 5 of Protocol No. 126/2020/ND-CP, APA applications involving foreign tax authorities previously required submission to the Government and Prime Minister for approval.

Protocol No. 122 formally delegates this authority to the Minister of Finance, including:

  • The power to approve and sign bilateral and multilateral APA agreements
  • The authority to set the effective date of the APA

Implementation process of APA

Under Protocol No.122, the Revenue Service retains its technical and procedural role in APA handling, including:

  • Preparing APA negotiation plans and consulting relevant ministries/agencies
  • Conducting formal negotiations with foreign tax authorities
  • Drafting APA agreements and submitting them to the Minister of Finance for signature

Transitional provisions

APA applications submitted before Protocol No. 122 takes effect, but not yet forwarded to the Government or Prime Minister, will now be approved and signed directly by the Minister of Finance.

Key takeaway

The decentralization of APA approval from the Government and Prime Minister to the Minister of Finance is a strategic reform that simplifies procedures, accelerates APA processing, and reflects Vietnam’s commitment to improving its business and investment environment.

About the Brief:

Asia remains one of the world’s primary investment hubs, attracting an increasing number of businesses that have either expanded or are contemplating expansion into its high-performing emerging markets. For multinational enterprises (MNEs), transfer pricing is an important issue that demands attention sooner or later.

Transfer pricing concerns the pricing arrangements between associated enterprises (AE) operating in different tax jurisdictions for their intercompany transactions. In alignment with international regulations, Asian taxpayers engaged in transactions with other group entities must substantiate that these dealings adhere to the “arm’s length standard.” This standard necessitates taxpayers to prove that their transactions with related parties mirror those with third parties in a similar manner and under comparable conditions.

Nevertheless, the transfer pricing landscape has grown more complex in recent years and can be challenging for MNEs to navigate successfully. Apart from the international transfer pricing initiatives spearheaded by the Organization for Economic Co-operation and Development (OECD), individual governments are intensifying their own tax and regulatory frameworks overseeing transfer pricing. This heightened focus aims to protect their tax revenue amid financial constraints caused by the three-year COVID-19 pandemic and to manage domestic jurisdiction compliance in a dynamic global business environment.

In this scenario, it is crucial for foreign investors to stay on top of international and regional transfer pricing updates in order to effectively address their global transfer pricing concerns. Consequently, starting Q3 2023, our team of Dezan & Shira transfer pricing and tax professionals has taken the initiative to produce a quarterly Asia Transfer Pricing Brief. This brief will succinctly summarize timely transfer pricing news, aiming to provide you and your Asia-based business with a strategic advantage in managing international taxation issues and ensuring compliance.

Dezan Shira & Associates’ transfer pricing practice helps companies conduct transactions with related parties to deal with transfer pricing issues. The services provided by our tax professionals are comprehensive and tailored to each client’s individual needs, often arising from the uniqueness of their business operations. For any support regarding transfer pricing documentation, benchmark study, tax audits, and transfer pricing policy monitoring, please contact China@dezshira.com.

About Us

China Briefing is one of five regional Asia Briefing publications. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Haikou, Zhongshan, Shenzhen, and Hong Kong in China. Dezan Shira & Associates also maintains offices or has alliance partners assisting foreign investors in Vietnam, Indonesia, Singapore, India, Malaysia, Mongolia, Dubai (UAE), Japan, South Korea, Nepal, The Philippines, Sri Lanka, Thailand, Italy, Germany, Bangladesh, Australia, United States, and United Kingdom and Ireland.

For a complimentary subscription to China Briefing’s content products, please click here. For support with establishing a business in China or for assistance in analyzing and entering markets, please contact the firm at china@dezshira.com or visit our website at www.dezshira.com.