OVERVIEW

On 15 December 2025, Vietnam officially issued Decree No. 320/2025/ND-CP (New Decree) guiding the implementation of Corporate Income Tax (CIT) Law No. 67/2025/QH15 in relation to capital transfers made by foreign corporate sellers[1].

While the new CIT Law took effect on 1 October 2025, the Decree's specific capital transfer tax mechanism (e.g., the 2% rate) is applicable only from the Decree's effective date i.e., 15 December 2025. This creates a regulatory gap from 01 October to 14 December 2025 (gap period). During the gap period, although tax obligation exists under the Law, specific calculation methodology lacks an applicable regulatory mechanism, and the resultant confusion will be further compounded by the current absence of official declaration forms.

While the New Decree outlines the applicable deemed rate and certain exclusion conditions, it also raises several issues that require further interpretation, necessitating careful review for divestments and internal restructuring planning.

KEY UPDATES AFFECTING CAPITAL TRANSFERS BY FOREIGN CORPORATE SELLERS

The New Decree addresses and provides clarification on several important tax issues. These are:

1. Unified Tax on Gross Proceeds (2%)

The New Decree formalizes the flat tax rate of 2% on the gross proceeds for direct and indirect capital transfers by foreign corporate sellers (Article 12.3(i)).

• This approach establishes a unified tax treatment for all capital transfers by foreign corporate sellers, applying consistently regardless of whether the transaction results in a gain or a loss.
• The New Decree does not provide guidance on the methodology required to determine the "gross proceeds attributable to Vietnam" in relation to complex, multi-jurisdictional indirect share transfers. Absence of definitive guidance could create room for differing interpretations and potential disputes concerning the tax base (especially if the upcoming CIT Circular remains silent on this aspect).

2. Internal Restructuring Exclusion

As per the New Decree, internal restructuring within foreign groups is not subject to capital transfer tax if the transaction meets following conditions:

• Does not lead to a change in the ultimate parent entity; and
• Does not generate taxable income.

While the provision is generally favorable, the New Decree does not specify the administrative procedures for applying this exclusion (e.g., whether a formal declaration or pre-approval is required and supporting documentation necessary to claim such an entitlement). Further guidance on this matter is expected.

3. Taxing Point

Under the New CIT Decree (Article 13.1), the taxing point for local corporate sellers is the capital transfer date. However, the Decree does not provide similar guidance for foreign corporate sellers. The upcoming CIT Circular is expected to clarify the taxing point applicable to foreign corporate sellers. Until further guidance is issued, interpretations may vary.

4. Tax Authority's Right to Inspect Non-Cash Transactions

The New Decree affirms the tax authority’s right to review and impose an adjusted valuation.

• For any capital transfer with a value of VND 5 million (~USD 190) or more lacking corresponding non-cash payment evidence (Article 13.2(a3)), the tax authority is authorized to inspect and adjust the transfer price for tax purposes.
• This underscores the mandatory requirement for robust evidence of payment, especially for transactions involving non-cash consideration (e.g., share or asset swaps), to prevent the tax authority from imposing an adjusted valuation.

ISSUES FOR CONSIDERATION

Foreign investors and MNEs should:

• Be aware of the relevant rules to address and manage the Vietnam Capital Transfer Tax implications, should they intend to divest and/or undertake mergers & acquisitions involving Vietnam based assets.
• Prepare comprehensive supporting documentation to substantiate internal restructuring structures, transaction values, and payment mechanisms, particularly for non-cash transfers.
• Continue monitoring the release of the Ministry of Finance’s Circular, which is expected to provide further guidance on the open areas such as methodologies required for attributing gross proceeds in complex indirect transfer scenarios, legal capital transfer date, taxing point for foreign corporate sellers.

HOW CAN A&M HELP?

A&M Vietnam Tax team is closely monitoring these developments and are available to further advise/support in this regard.

We are uniquely positioned to assist clients in complex areas involving:

• Apportionment Strategy and Defense: We can support in building robust defense documentation for Indirect Transfers by developing and justifying the methodology used to calculate "gross proceeds attributable to Vietnam". This key issue is likely to face high audit scrutiny.
• Compliance Readiness and Deadline Management: We can advise on transaction sequencing and compliance implementation to accurately identify the "time of transferring capital ownership," ensuring compliance readiness and minimizing penalties associated with the strict 10-day filing deadline.
• Non-Taxable Restructuring Support: We can review restructuring plans and assist in preparing tax documentation to substantiate the conditional exclusion for internal group restructurings, minimizing the inadvertent trigger of the 2% gross proceeds tax.
• M&A Tax Modeling: We will help to integrate the new 2% flat tax and transitional risks into deal models to accurately reflect tax liabilities, enhancing valuation integrity for both buyers and sellers in complex M&A scenarios.

All the information contained in this tax update is for the general key update and reference purposes only and is not intended to be relied on as specific professional advice for any actions. There is no guarantee and/or liability (from A&M, its employees, or any parties and/or personnel) of the completeness and/or accuracy (express or implied) of any information contained in this tax update. For further discussion, please contact us.