Complying with Vietnam’s New Capital Transfer Taxation Rules

Vietnam has strengthened its oversight of capital transfer taxation through a new regulatory framework governing the corporate income tax (CIT) treatment of such transactions.

Issued on December 15, 2025, Decree No. 320/2025/ND-CP (“Decree 320”) introduced key changes, including deemed tax rates, clearer recognition of indirect transfers, and revised exemptions for intra-group restructuring.

To implement these rules, the Ministry of Finance (MoF) issued Circular No. 20/2026/TT-BTC (“Circular 20”) on March 12, 2026, providing guidance on compliance procedures and documentation requirements.

This was followed by Circular No. 21/2026/TT-BTC on March 17, 2026, which updates the tax declaration forms for capital transfer transactions.

To mitigate tax risks and ensure compliance, businesses should familiarise themselves with the new administrative requirements and the key obligations introduced under the comprehensive framework.

Determination of taxable revenue for capital transfers

Under the new regime, the timing for determining taxable revenue in capital transfer transactions involving foreign enterprises. Taxable revenue is recognized when the initial capital transfer agreement takes legal effect in accordance with applicable regulations.

However, the wording in Circular 20 remains unclear. In particular, the term “initial capital transfer agreement” is not defined and could be interpreted to refer to the original agreement executed by the parties, regardless of any subsequent amendments or restatements, provided the agreement has become legally effective under applicable law.

Additionally, where the transfer value stated in a capital transfer agreement is VND 5 million or more but is not supported by valid non-cash payment documentation, the tax authority may reassess the transaction and determine the transfer price for CIT purposes.

Applicable tax rate

Under Point i, Clause 3, Article 12 of Decree 320, income from capital transfers derived by the following foreign enterprises is subject to CIT on a deemed basis at a rate of 2 percent of the capital transfer proceeds:

• Foreign enterprises without a permanent establishment (PE) in Vietnam;
• Foreign enterprises with a PE in Vietnam where the capital transfer income is not attributable to the PE’s activities; and
• Foreign enterprises conducting business in Vietnam through e-commerce or digital platforms.

Exclusion for intra-group ownership restructuring

Circular 20 elaborates on the exclusion for intra-group ownership restructuring, confirming that qualifying transactions are not subject to deemed CIT where they do not result in a change to the group’s ultimate parent company and do not generate taxable income.

The circular specifies that the exemption covers transactions including:

• demergers and company divisions;
• mergers and consolidations;
• share swaps;
• capital contributions made using shares;
• stock dividend and bonus share distributions within the group; and
• other direct or indirect ownership transfers involving Vietnamese enterprises within the same corporate group.

To be regarded as non-income generating, the restructuring must satisfy all of the following conditions:

• the ultimate beneficial owner remains unchanged following the restructuring;
• the transfer value does not exceed the book value or the original investment value;
• the transaction does not create any gain, and the value determined under the approved restructuring documentation does not exceed the recorded value at the time of transfer; and
• the transferee assumes all investment values, rights, and obligations associated with the transferred capital.

CIT declaration for capital transfers

Under Circular 21, foreign enterprises carrying out capital transfer transactions are required to use the new Form 05/TNDN, issued as an appendix to the circular, when declaring corporate income tax (CIT) arising from capital transfers.

Compliance deadline

Pursuant to Article 8.4(o) of Decree No. 126/2020/ND-CP, CIT arising from capital transfer transactions is subject to transaction-based declaration, with the tax return required to be filed within 10 calendar days from the date the tax obligation arises.

As the tax administration regulations do not define the date on which the tax obligation arises for capital transfers, taxpayers must instead rely on the applicable CIT regulations.

Transitional provision

For foreign enterprises whose capital transfer agreements were signed before Decree 320 took effect, CIT declarations must continue to be submitted using Form No. 05/TNDN issued under Circular No. 80/2021/TT-BTC.

The transitional rule ensures that transactions initiated before the effective date of Decree 320 remain subject to the previous declaration procedures, while new transactions follow the updated reporting framework introduced under Circular 21.

Practical considerations for businesses

Businesses undertaking capital transfer transactions should review their tax compliance processes to align with the new framework. Key areas of focus include:

• Reviewing transaction structures to determine whether a capital transfer falls within the deemed CIT regime or qualifies for an exclusion.
• Maintaining comprehensive supporting documentation, including evidence for qualified intra-group restructurings and non-cash payment documentation.
• Prepare robust supporting documentation for indirect capital transfer transactions, including sufficient evidence to substantiate the valuation of, and the allocation of the transfer proceeds attributable to, the Vietnamese investment for Vietnamese tax reporting purposes.

Proactive compliance and robust documentation will help businesses mitigate tax risks under Vietnam’s updated capital transfer tax framework.

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

This article was first published on December 30, 2025, and was last updated on July 15, 2026.