Tiếng Việt
中文 (中国)
HOW DOES A SPECIAL RELATIONSHIP BETWEEN BUYER AND SELLER AFFECT CUSTOMS VALUE?
Importers buying from a parent, subsidiary, fellow group company or exclusive distributor often assume that Customs will automatically reject the invoice price. That is not correct. A special relationship must be declared and examined when the transaction-value method is used, but the relationship itself does not prove that the price was influenced. The key issue is whether the importer can substantiate the pricing mechanism, commercial terms and profit outcome. Where the evidence is insufficient, the transaction value may be rejected and customs value determined under the subsequent methods. This article explains the related-party tests, the two principal routes for demonstrating that the relationship did not influence the price, and the records businesses should retain.
QUICK FACTS
No automatic rejection
A special relationship does not automatically disqualify the transaction value. The importer must show that the relationship did not influence the price.
Declare the actual structure
Ownership, control, management, employment, family or certain exclusive arrangements may create a special relationship under customs valuation rules.
Two proof routes
Vietnamese law permits either route: circumstances-of-sale analysis or a comparison with qualifying test values. Both are not mandatory at the same time.
Prepare contemporaneous evidence
Pricing policies, comparisons, contracts, independent-customer sales and cost-profit analyses should exist before Customs raises a query.
SCOPE
This article applies mainly to imported goods intended to be valued under the transaction-value method where the Vietnamese buyer and overseas seller are connected through ownership, management, control, employment, family or qualifying exclusive-business arrangements.
- Typical cases include parent-subsidiary transactions, fellow group companies, joint ventures and parties under common control.
- It also covers imports priced under group transfer-pricing or distribution policies.
- A customs-valuation “special relationship” is not identical to a domestic tax “related-party relationship”; the thresholds and legal purposes differ.
- A transfer-pricing report should not be treated as the sole proof that customs value is acceptable.
KEY TERMS
| Term | Meaning | Operational role |
|---|---|---|
| Special relationship / Related parties | A relationship between buyer and seller meeting the customs-valuation criteria. | Must be assessed before transaction value is accepted. |
| Transaction value | The price actually paid or payable, adjusted as required by law. | Primary valuation method when all conditions are met. |
| Circumstances of sale | How the price, discount, costs and profit were negotiated and formed. | Shows whether pricing followed normal commercial logic. |
| Test value | A statutory comparison value; it is not an imposed reference price. | Tests whether the declared value closely approximates appropriate values. |
| Commercial level | Wholesale, retail, distributor, agent or end-user level. | Differences must be adjusted when prices are compared. |
| Transfer-pricing file | Documentation for domestic tax treatment of controlled transactions. | Supporting evidence only; it does not replace shipment-level customs analysis. |
WHEN ARE THE PARTIES SPECIALLY RELATED?
Buyer and seller are regarded as specially related when one of the following categories applies:
| Relationship category | Indicator | Data to review |
|---|---|---|
| Cross-management | Both are employees; or one is an employee and the other is a director in another enterprise. | Appointments, employment records and management roles. |
| Legally recognised business partners | The parties are business partners under a legally recognised partnership arrangement. | Charter, registration and contribution agreements. |
| Employer and employee | One party employs the other. | Employment relationship and pricing authority. |
| Voting-stock ownership | A third person directly or indirectly owns, controls or holds at least 5% of the voting shares of both parties. | Share registers and direct/indirect ownership charts. |
| One controls the other | One party can directly or indirectly control the other. | Voting rights, appointment rights and control agreements. |
| Common third-party control | Both parties are directly or indirectly controlled by a third party. | Group chart, ultimate owner and governance rights. |
| Joint control of a third party | Both parties directly or indirectly control a third party. | Investments, votes and shareholder agreements. |
| Family relationship | Spouses; legally recognised parents and children; blood-related grandparents and grandchildren; aunts, uncles and biological nieces or nephews; siblings; and siblings-in-law. | Owners, representatives and family links. |
| Exclusive commercial arrangement | One is the other’s exclusive agent, distributor or concessionaire and at least one of the above criteria is also met. | Exclusivity agreement plus ownership/control evidence. |
HOW THE RELATIONSHIP MAY INFLUENCE VALUE
The relationship affects customs value when it causes the purchase price to depart from a price formed under independent commercial conditions. Indicators may include selling below normal cost, shifting profit into separate payments, unsupported discounts, or keeping royalties, technical support and group charges outside the invoice price.
RISK ARISES WHEN THE RELATIONSHIP INFLUENCES PRICE OR THE IMPORTER CANNOT PROVE OTHERWISE
Under Article 7(2), the relationship is treated as not influencing transaction value when either one of the two statutory conditions below is met; the importer is not required to produce both categories of proof.
ROUTE 1: CIRCUMSTANCES-OF-SALE ANALYSIS
This route examines how the parties established the commercial relationship and negotiated the declared price. The importer should show that the sale was conducted as it would be with unrelated buyers importing the same goods into Vietnam.
- Pricing follows a general price list or policy applied consistently to customers at the same commercial level.
- Discounts are linked to objective criteria such as volume, sales commitment, market, payment terms or distribution functions.
- The price recovers all costs and provides a profit representative of sales of goods of the same class or kind over an appropriate period.
- No undisclosed payment, rebate or benefit is transferred to the seller outside the declared documentation.
ROUTE 2: TEST-VALUE COMPARISON
The declared value may be compared with one of the following test values for goods exported to Vietnam on the same date or within 60 days before or 60 days after the export date of the shipment being substantiated:
- Customs values accepted under the transaction-value method for identical or similar imports sold to another importer unrelated to the exporter.
- Deductive values of identical or similar goods.
- Computed values of identical or similar goods.
Test values are for comparison only, not substitute values imposed on the shipment. “Closely approximates” must be assessed after aligning conditions of sale and considering the nature of the goods, the producing industry, seasonality and commercially insignificant differences, together with adjustments for commercial level, quantity, freight, insurance, additions and deductions. No universal percentage applies.
RISK-ASSESSMENT MATRIX
| File status | Preliminary assessment | Transaction-value risk | Action |
|---|---|---|---|
| Related parties; general pricing policy; comparable independent-customer sales. | Evidence may show no price influence. | Lower if comparability is reliable. | Document adjustments and retain the comparison. |
| Only a group-level transfer-pricing report, with no SKU or import link. | Evidence is indirect. | Medium to high. | Reconcile transfer-pricing data to invoices, SKUs and customs additions. |
| Price materially below independent sales without volume, market or level explanation. | Potential price influence. | High. | Provide objective commercial evidence. |
| Low invoice price plus royalty, management fee or buyer assistance paid to related parties. | Possible indirect payment or addition. | High if omitted. | Map all payment streams and sale conditions. |
| Relationship not declared despite clear ownership evidence. | Incomplete declaration. | Very high. | Assess supplemental declaration and prepare explanation. |
| No independent-sale comparison, but reliable cost-profit analysis. | Circumstances-of-sale route may be available. | Depends on data quality. | Substantiate sources, period and representativeness. |
DOCUMENTS AND DATA TO PREPARE
| Record group | Owner/issuer | Required content | Use |
|---|---|---|---|
| Ownership and governance | Legal, parent company, corporate secretary | Group chart, ownership percentages, voting rights, ultimate owner and appointment rights. | Identify and declare the relationship. |
| Sales and distribution contracts | Procurement and legal | Pricing terms, Incoterms, discounts, exclusivity, market duties and payment conditions. | Explain the circumstances of sale. |
| Internal pricing policy | Group finance/commercial team | Cost base, markup, adjustment cycle and discount criteria. | Show that prices are not set arbitrarily shipment by shipment. |
| Independent-customer sales | Seller/group entity | Invoices, contracts, quantity, market, commercial level, date and delivery terms. | Build an adjusted test-value comparison. |
| Cost-profit analysis | Management accounting/finance | Manufacturing or purchase cost, selling cost, normal profit and analysis period. | Support normal cost recovery and profit. |
| Transfer-pricing documentation | Tax, advisers, group | Functional analysis, benchmark, pricing method and comparables. | Supporting evidence that must be linked to imports and customs adjustments. |
| Payments outside the invoice | Accounting, bank, legal | Royalties, management fees, rebates, credit notes, assists and third-party payments. | Identify indirect payments and additions. |
| Declaration-level reconciliation | Customs, accounting, tax | Invoice → payment → post-import charge → customs adjustment → tax. | Create an audit trail for consultation or post-clearance audit. |
PRE-DECLARATION CONTROL PROCESS
Review ownership, control, management, employment, family and exclusivity.
At declaration registration, disclose that a special relationship exists but did not influence the price on the import declaration and, where required, the customs value declaration; do not substitute domestic transfer-pricing tests for customs criteria.
Include invoice price, rebates, credit notes, royalties, management fees, assists and third-party payments.
Select the statutory route supported by the facts: circumstances of sale or qualifying test values. Both may be combined to strengthen the file.
Adjust for date, quantity, commercial level, Incoterms, freight, insurance and additions.
Explain differences between import-declaration prices and domestic-tax data.
Maintain analyses by year, seller and SKU group; refresh when pricing or ownership changes.
COMMON RISKS AND ERRORS
| Error | Cause | Impact | Control |
|---|---|---|---|
| Failure to declare the relationship | Indirect ownership or control is not reviewed. | Reduced credibility; supplemental declaration, assessment and penalties may follow. | Maintain group and ultimate-owner charts. |
| Assuming any intra-group price is acceptable | Corporate connection is confused with price evidence. | Low prices and discounts cannot be substantiated. | Prepare circumstances-of-sale and comparison analyses. |
| Using the transfer-pricing report alone | Profit analysis is enterprise-level rather than shipment/SKU-level. | Import price and customs additions remain unexplained. | Bridge the report to invoices and declarations. |
| Comparing non-comparable prices | Quantity, market, Incoterms, time or commercial level differs. | Unreliable conclusion. | Record criteria and make supportable adjustments. |
| Omitting royalties or management fees | Contracts are held by other functions. | Indirect payments or additions may be understated. | Share all intercompany agreements with customs staff. |
| Creating documents only after a query | No contemporaneous file exists. | Lower evidential reliability. | Create periodic files from source data. |
| Not updating after group restructuring | M&A or control changes are not communicated. | Relationship status may be misdeclared across many entries. | Legal must trigger customs alerts when ownership changes. |
LEGAL BASIS AND OFFICIAL SOURCES
| Instrument | Issuer | Status | Role |
|---|---|---|---|
| Consolidated Customs Law 54/VBHN-VPQH dated 23 March 2026 | Office of the National Assembly | Current consolidated reference. | Self-declaration and responsibility for customs value. |
| Circular 39/2015/TT-BTC dated 25 March 2015 | Ministry of Finance | Effective 1 April 2015. | Original customs-valuation circular; Article 7 governs special relationships. |
| Circular 60/2019/TT-BTC dated 30 August 2019 | Ministry of Finance | Effective 15 October 2019; amends Circular 39/2015. | Updates customs-valuation methods and supporting records. |
| Decision 2681/QD-BTC dated 16 December 2019 | Ministry of Finance | Effective on issuance. | Corrects Circular 60/2019. |
| Consolidated Circular 21/VBHN-BTC dated 23 April 2020 | Ministry of Finance | Consolidated reference only; it does not replace the legal effect of the underlying circulars. | Consolidates Circulars 39/2015 and 60/2019, including Article 7. |
| Decree 08/2015 as amended by Decrees 59/2018 and 167/2025 | Government | Decree 167/2025 effective 15 August 2025. | Framework for customs value review, consultation and determination. |
| Decree 169/2026/ND-CP | Government | Effective 1 July 2026. | Administrative penalties in the customs field. |
Core principle: a special relationship does not automatically disqualify transaction value. The importer must disclose it at declaration registration; where Customs has doubts, Customs notifies the importer and conducts a dialogue so that supporting information can be provided.
FAQ
1. Will Customs automatically reject a parent-to-subsidiary price?
No. The relationship must be declared, but the price may still be accepted if the importer proves that it did not influence the price and all other transaction-value conditions are met.
2. Is being close to a customs reference price sufficient?
No. Customs reference data used for risk management is not automatically an Article 7 test value. A test value must be a qualifying customs value within the same-day or ±60-day window and adjusted to comparable conditions of sale.
3. Can a transfer-pricing report replace the customs-value file?
No. It may support the file, but it often analyses enterprise or segment profit rather than a specific imported product and transaction.
4. Is an exclusive distributor always specially related?
No. Exclusivity must be accompanied by another qualifying management, ownership, control, employment or family criterion.
5. What if there are no independent-customer sales?
The importer may rely on circumstances of sale, pricing policy and reliable cost-profit analysis, supported by objective source data.
6. Can a low intra-group price be justified by volume?
Potentially, where the volume discount is documented, consistently applied and commercially supportable. A general statement that “large orders are cheaper” is insufficient.
7. What happens if the relationship influenced the price?
If the transaction-value conditions are not met, customs value is determined sequentially under the subsequent statutory methods, with any resulting tax obligations.
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