CORPORATE INCOME TAX ON CAPITAL AND SECURITIES TRANSFERS BY FOREIGN ENTERPRISES IN VIETNAM – KEY CONSIDERATIONS UNDER THE 2025 CIT LAW
On 14 June 2025, the National Assembly of Vietnam enacted the Law on Corporate Income Tax No. 67/2025/QH15, which takes effect on 1 October 2025 and applies to the corporate income tax period for the 2025 tax year (the “2025 CIT Law”). The 2025 CIT Law replaces the Law on Corporate Income Tax No. 14/2008/QH12 (the “2008 CIT Law”).
On 15 December 2025, the Government promulgated Decree No. 320/2025/ND-CP detailing the implementation of the Law on Corporate Income Tax, effective from 15 December 2025 (the “Decree 320”).
In this publication, Mr. Phan Quang Chung, Attorney-at-Law of BFSC Law LLC (“BFSC Law LLC”), discusses certain corporate income tax issues relating to capital transfers and securities transfers by foreign enterprises under the 2025 CIT Law and Decree 320. This publication is intended solely to provide general legal information. It does not cover every aspect of the applicable legislation and should not be relied upon as tax advice in relation to any specific capital transfer or securities transfer transaction.
(1) Corporate Income Tax on Income Derived from Capital Transfers
(1.1) Income derived from capital transfer activities
Pursuant to Article 13.1 of Decree 320, income derived from capital transfers refers to income arising from the transfer of all or part of an enterprise’s invested capital to one or more organizations or individuals, including transfers through the sale of an enterprise, transfer of capital contribution rights, and other forms of capital transfer as prescribed by law. Such income also includes income from the transfer of shares in non-public joint stock companies and the transfer of shares in organizations that are neither listed nor registered for trading under the securities laws.
Decree 320 introduces a revised classification of income arising from transfers of shares in joint stock companies compared with the guidance under the former corporate income tax legislation. Accordingly, income derived from the transfer of shares in non-public companies or organizations that are neither listed nor registered for trading under the securities laws is classified as income from capital transfers, rather than income from securities transfers, as previously provided under the former corporate income tax regime and its implementing regulations.
(1.2) Determination of taxable income from capital transfers
Pursuant to Article 13.2 of Decree 320, taxable income from capital transfers is determined as the transfer price less the acquisition cost of the transferred capital and the transfer-related expenses.
(i) Transfer price
The transfer price is the total actual consideration received by the transferor under the transfer agreement, provided that such price is consistent with market value and payment is made by non-cash payment methods.
The tax authority is entitled to determine the transfer price in accordance with the Law on Tax Administration where there are grounds to suspect tax avoidance or tax evasion.
(ii) Acquisition cost of the transferred capital
The acquisition cost depends on the manner in which the capital was acquired.
- Where the capital represents the initial capital contribution for the establishment of an enterprise, the acquisition cost is the cumulative contributed capital up to the transfer date, as evidenced by accounting books, accounting records and supporting documents, confirmed by the capital contributors or parties to the business cooperation contract, or by the audit report issued by an independent auditing firm in the case of wholly foreign-owned enterprises.
- Where the capital is acquired from another party, the acquisition cost is the value of the capital at the acquisition date, determined on the basis of the capital transfer agreement and payment documents.
(iii) Transfer-related expenses
Transfer-related expenses must be direct expenses incurred in connection with the capital transfer and supported by lawful invoices and supporting documents.
(1.3) Corporate income tax rates applicable to capital transfers
(i) Vietnamese enterprises: 20% of taxable income.
(ii) Foreign enterprises: 2% of taxable turnover.
(2) Corporate Income Tax on Securities Transfers
(2.1) Income derived from securities transfers
Pursuant to Article 14.1 of Decree 320, income derived from securities transfers refers to income arising from the transfer of shares and share subscription rights of public companies, listed companies or trading-registered organizations; transfers of bonds, treasury bills, fund certificates; and other securities as prescribed under the securities laws.
(2.2) Determination of taxable income from securities transfers
Taxable income from securities transfers is determined by deducting the acquisition cost of the transferred securities and the related transfer expenses from the selling price of the securities.
(i) Selling price
The selling price is determined as the matched trading price or negotiated trading price for securities listed or registered for trading on a stock exchange, as announced by the relevant stock exchange, or the price stated in the transfer agreement, as applicable.
(ii) Acquisition cost
The acquisition cost is determined based on:
- the matched trading price or negotiated purchase price announced by the stock exchange for listed or trading-registered securities;
- the successful auction price together with evidence of payment for auction-acquired securities; or
- the purchase price stated in the transfer agreement in all other cases.
(iii) Transfer-related expenses
Transfer-related expenses include actual expenses directly incurred in connection with the securities transfer and supported by lawful invoices and supporting documents, including:
- expenses incurred for completing legal procedures relating to the transfer;
- statutory fees and charges;
- transaction, negotiation and contract execution expenses; and
- other documented expenses directly related to the transfer.
(2.3) Corporate income tax applicable to securities transfers
(i) Vietnamese enterprises: 20% of taxable income.
(ii) Foreign enterprises: 0.1% of taxable turnover.
Disclaimer
This publication does not constitute the legal or tax opinion of BFSC Law LLC or the author in relation to any particular capital transfer, transfer of capital contribution rights, or securities transfer transaction that may arise in practice.
Accordingly, readers are advised to use the information contained herein for general reference purposes only and should not rely upon it in connection with any specific capital transfer or securities transfer transaction without obtaining independent legal and tax advice.
For legal matters relating to corporate income tax applicable to capital transfers or securities transfers, or other investment-related transactions in Vietnam, please contact BFSC Law LLC for professional legal assistance.
Author
Phan Quang Chung
Attorney-at-Law
Email: [email protected]
Tel: +84 (24) 7108 2688 (Ext. 102)
Mobile: +84 906 199 119