Capital Transfer Taxation and Exclusions Under Decree 320: A Practical Guide

Vietnam’s Decree No. 320/2025/ND-CP has altered the application of corporate income tax (CIT) to capital transfers, requiring businesses to comply with its provisions carefully.

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Vietnam’s newly issued Decree No. 320/2025/ND-CP (“Decree 320”) introduces significant changes to the corporate income tax treatment of capital transfer transactions, including a deemed tax rate, clearer recognition of indirect transfers, and narrowly defined exclusions for intra-group restructuring.

This article examines the key capital transfer rules under Decree 320, highlights newly introduced compliance obligations, and outlines practical considerations for businesses during the transitional period.

Applicable transactions

Under Point i, Clause 3, Article 12 of Decree 320, income from capital transfers is subject to a deemed corporate income tax (CIT) rate of 2 percent.

The decree explicitly excludes certain intra-group ownership restructuring transactions, provided that both of the following conditions are satisfied:

• The restructuring does not result in a change to the ultimate parent company of the entities that directly or indirectly hold ownership interests in a Vietnam-based enterprise; and
• The transaction does not generate taxable income.

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Notably, Decree 320 formally introduces the concept of indirect capital transfers, offering clearer recognition of such transactions compared with previous CIT regulations. However, the decree does not provide detailed guidance on how to determine the portion of sales proceeds attributable to Vietnam in multi-jurisdictional indirect share transfers, leaving a key practical issue unresolved.

With respect to intra-group restructuring transactions that generate no income, further clarification is expected in the forthcoming CIT circular, particularly regarding the types of transactions that qualify for exclusion.

Newly introduced provisions

One significant new provision concerns the timing of income recognition for capital transfer transactions. Income is deemed to arise at the time of transferring ownership of the capital. However, Decree 320 does not define this term, creating uncertainty as to whether it refers to:

• The signing date of the sale and purchase agreement;
• The date the transaction is substantively completed; or
• The date on which equity change registration is finalized.

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Moreover, as this provision is set out in Article 13 of Decree 320, which appears to govern capital transfers conducted by Vietnamese sellers, it remains unclear whether the same timing rule also applies to capital transfers by foreign corporate sellers. Additional guidance is therefore anticipated.

Another newly introduced provision addresses non-cash transactions. In cases where the transfer value stated in the sale and purchase agreement is VND 5 million or more but is not supported by non-cash payment documentation, the tax authority is empowered to reassess and impose a transfer price for tax purposes.

Transitional period considerations

Although the new Law on Corporate Income Tax takes effect on October 1, 2025, the specific provisions governing capital transfers apply only from the effective date of Decree 320, namely December 15, 2025.

As a result, capital transfer transactions carried out during the transitional period from October 1, 2025, to December 14, 2025, require careful analysis to determine which tax regulations apply.

Tax administration and compliance procedures

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At present, no specific tax declaration form has been issued for capital transfer transactions subject to the 2 percent tax rate. The existing declaration form defaults to a 20 percent CIT rate and does not allow taxpayers to adjust the rate to reflect the new rules.

Although the revised Law on Tax Administration was approved on 10 December 2025, the officially promulgated version has not yet been released. Even after its publication, additional decrees and circulars will be required to provide implementation guidance, including the issuance of appropriate tax declaration forms.

Practical considerations for businesses

In the absence of detailed guidance on several newly introduced and ambiguous provisions, businesses are expected to comply with the regulations as currently enacted and to monitor the forthcoming CIT circular for further clarification closely.

Taxpayers should also ensure that robust and consistent supporting documentation is in place to substantiate eligibility for the intra-group ownership restructuring exclusion, particularly in transactions where no income is generated.

See also: Updated CIT Compliance in Vietnam: Key Provisions of Decree 320/2025

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