Tax on capital transfer is a common issue for enterprises today. The article below sets out the legal provisions governing tax advisory in capital transfer transactions and addresses a number of related concerns, thereby assisting individuals and organizations in protecting their lawful rights and interests.
I. Current situation regarding tax advisory on capital transfer
Contributed capital is recognized as a crucial element in the establishment and operation of an enterprise. The transfer of contributed capital is also a frequent activity during business operations. Accordingly, organizations and individuals are required to fulfill tax obligations arising from income generated from capital transfers.
The engagement of professional tax advisory service providers has become increasingly prevalent. Tax advisory in capital transfer helps individuals and enterprises ensure compliance with prevailing tax regulations and avoid administrative fines.
II. Concept of tax advisory on capital transfer
1. What is tax advisory on capital transfer?
Pursuant to Articles 52 and 127 of the Law on Enterprise 2020 (as amended in 2025), capital transfer refers to an act whereby the owner of a capital contribution transfers part or all of such capital to another party through a contract. The transferee shall become a new member or shareholder of the enterprise, depending on the type of company.
Tax advisory on capital transfer refers to an activity supporting individuals or organizations in determining tax obligations, optimizing financial benefits, and ensuring legal compliance when conducting transactions involving the sale, transfer, or assignment of capital contributions or shares in an enterprise.
2. Which capital transfer transactions commonly lead to tax obligations requiring advisory?
Pursuant to Clause 4, Article 3 of the Law on Personal Income Tax 2007 (as amended in 2012 and 2024) and Point a, Clause 2, Article 3 of the Law on Corporate Income Tax 2025 as guided by Articles 13 and 14 of Decree No. 320/2025/ND-CP, the following transactions commonly leads to tax obligations:
- Transfers of capital in economic organizations;
- Transfers of securities;
- Transfers of part or all of an enterprise’s invested capital to one or more organizations or individuals;
- Transfers of shares in non-public companies or in organizations that are not listed or registered for trading under securities laws;
- Other forms of capital transfer.
3. What role does tax advisory play in mitigating legal risks in capital transfer transactions?
In the context of increasingly complex tax regulations and stricter financial transparency requirements, tax advisory services play a critical role, specifically:
- Updating new legal regulations: Tax advisors possess in-depth knowledge of tax policies and current legal regulations, helping clients correctly apply applicable laws and avoid risks arising from misapplication.
- Ensuring compliance and proper documents: Tax advisors assist in the preparation of complete and compliant legal dossiers, ensuring valid payment documents and adherence to statutory deadlines. Advisory firms may represent or accompany enterprises in working with tax authorities during inspections or audits relating to transaction valuation and tax bases.
- Minimizing disputes: Tax advisory helps parties clearly identify tax obligations and responsibilities, thereby preventing disputes and administrative sanctions.
Accordingly, tax advisory on capital transfer plays an essential role in mitigating legal risks for all parties involved.
III. Legal provisions on tax advisory for capital transfer
1. Which legal instruments govern capital transfer tax?
Capital transfer tax is primarily governed by the following legal framework:
- Law on Personal Income Tax 2007 (as amended in 2012 and 2024): Providing detailed regulations on taxable income, timing of income determination, and tax rates applicable to capital transfer activities of resident and non-resident individuals.
- Law on Corporate Income Tax 2025: Governing income derived from capital transfer and transfer of investment projects, which must be declared and subject to corporate income tax in accordance with general provisions.
- Law on Tax Administration 2019: Providing regulations on tax declaration procedures, deadlines for tax payment, and obligations of taxpayers.
- Law on Enterprise 2020 (as amended in 2025): Governing the rights of members and shareholders regarding the transfer of capital contributions and shares.
Overall, the above legal instruments regulate capital transfer tax applicable to individuals and organizations.
2. Who is responsible for tax declaration and payment in capital transfer transactions?
Pursuant to Clause 2, Article 17 of the Law on Tax Administration 2019 (as amended in 2024), taxpayers are responsible for making accurate, truthful, and complete tax declarations, submitting tax dossiers on time, and taking legal responsibility for the accuracy and completeness of such dossiers and supporting documents.
Tax obligations are determined as follows:
- For individuals: Income from capital transfer constitutes taxable personal income under Clause 4, Article 3 of the Law on Personal Income Tax 2007. Taxpayers include:
- Resident individuals with taxable income arising inside and outside Vietnam;
- Non-resident individuals with taxable income arising within Vietnam.
- For organizations: Income from capital transfer constitutes taxable corporate income under Point a, Clause 2, Article 3 of the Law on Corporate Income Tax 2025. Taxpayers include:
- Enterprises established under Vietnamese law;
- Foreign enterprises with permanent establishments in Vietnam;
- Foreign enterprises without permanent establishments (taxable on Vietnam-sourced income, including digital business activities).
Accordingly, tax declaration and payment obligations are implemented as prescribed above.
3. Which expenses are deductible when calculating taxable income from capital transfer?
Pursuant to Point c, Clause 1, Article 9 of the Law on Corporate Income Tax 2025, deductible expenses are valid invoices and non-cash payment documents, except for special cases prescribed by the Government.
Pursuant to Clause 1, Article 13 of the Law on Personal Income Tax 2007, taxable income from capital transfer is determined as the transfer price minus acquisition cost and reasonable expenses related to generating such income. For securities transfers, taxable income is determined per transaction.
Pursuant to Clause 4, Article 15 of Decree No. 65/2013/ND-CP, reasonable expenses include:
- Expenses for legal procedures related to the transfer;
- Fees and charges payable to the State budget;
- Other relevant expenses.
Accordingly, deductible expenses are determined in accordance with the above provisions.
4. What are the deadlines for tax declaration and payment in capital transfer transactions?
Pursuant to Point b, Clause 1, Article 7 of the Law on Personal Income Tax 2007, tax is calculated on a per-occurrence basis for capital transfer income (except securities).
For securities transfers, tax may be calculated per transaction or annually.
- Pursuant to Point a, Clause 2 and Clause 3, Article 44 of the Law on Tax Administration 2019, for taxes declared per occurrence, the deadline for submission of tax returns is no later than the 10th day from the date the tax liability arises.
- For annual declarations, tax returns must be submitted by the last day of the first month of the calendar or fiscal year.
Thus, individuals must submit personal income tax returns within 10 days from the date of capital transfer. For securities, declarations may be made per transaction or annually.
For corporate income tax: Tax returns must be submitted no later than the 10th day from the date the tax obligation arises for per-occurrence declarations.
Accordingly, individuals and organizations must strictly comply with statutory deadlines.
IV. Questions related to tax advisory on capital transfer
1. Does the transfer of capital contributions in the form of asset exchange lead to tax obligations?
The transfer of capital contributions in the form of asset exchange does lead to tax obligations. Such transactions involve both the transfer of capital and the transfer of ownership of assets.
- Income derived by individuals from capital transfer constitutes taxable personal income according to Clause 4, Article 3 of the Law on Personal Income Tax 2007.
- Income derived by organizations from capital transfer constitutes taxable corporate income according to Point a, Clause 2, Article 3 of the Law on Corporate Income Tax 2025.
Pursuant to Clause 5, Article 3 of the Law on Personal Income Tax 2007, taxable personal income includes income derived from real estate transfer, comprising:
- Income from transfer of land use rights and assets attached to land;
- Income from transfer of ownership or use rights of residential housing;
- Income from transfer of rights to lease land or water surfaces;
- Other income derived from real estate transfers.
Pursuant to Points b and d, Clause 2, Article 3 of the Law on Corporate Income Tax 2025, taxable corporate income includes:
- Income from real estate transfer, except for income from real estate transfer of enterprises engaged in real estate business;
- Income from transfer, lease, or liquidation of assets, including valuable papers, excluding real estate.
Accordingly, the transfer of capital contributions through asset exchange leads to tax obligations as both the transfer of capital and the transfer of assets fall within taxable categories.
2. Is tax payable in cases where capital transfer does not generate profit?
Pursuant to Point b, Clause 1 and Clause 2, Article 7 of the Law on Personal Income Tax 2007 as guided by Article 6 of Circular No. 111/2013/TT-BTC, individuals transferring capital contributions are required to declare tax on each occurrence of transfer, regardless of whether taxable income arises.
Accordingly, even where no profit is generated from the capital transfer, individuals are still required to declare tax in accordance with regulations.
3. How should tax be declared in cases of multiple capital transfers within the same tax period?
Pursuant to Point b, Clause 1 and Clause 2, Article 7 of the Law on Personal Income Tax 2007 as guided by Article 6 of Circular No. 111/2013/TT-BTC, individuals must declare tax on a per-transaction basis, irrespective of whether income arises. Accordingly, each transfer transaction leading to income requires a separate tax declaration dossier submitted by the individual (or by the enterprise on their behalf).
In contrast, enterprises do not declare tax on a per-transaction basis for capital transfers but instead follow the annual tax period (calendar year or fiscal year) as selected by the enterprise according to Clause 1, Article 5 of the Law on Corporate Income Tax 2025.
4. How are declared tax obligations handled if the capital transfer contract is cancelled or amended?
Pursuant to Clause 2, Article 8 of the Law on Personal Income Tax 2007, individuals are entitled to tax refunds in the following cases:
- The amount of tax already paid exceeds the payable tax amount;
- Tax has been paid but taxable income does not reach the threshold for tax liability;
- Other cases as decided by competent state authorities.
Pursuant to Clause 1, Article 60 of the Law on Tax Administration 2019, where the taxpayer has paid tax, late payment interest, or fines in excess of the amount payable, such overpaid amounts may be offset against outstanding tax liabilities or future tax obligations, or refunded where no outstanding liabilities remain.
In conclusion, where a capital transfer contract is cancelled or amended, the declared tax obligations may be offset against outstanding or future tax liabilities, or the taxpayer may apply for a refund of overpaid tax from the state budget.
5. Does transferring capital through an intermediary company affect tax obligations?
Pursuant to Clause 6, Article 16 of the Law on Tax Administration 2019, taxpayers have the right to enter into contracts with tax service providers to implement tax procedures through tax agency services.
At the same time, Clause 6, Article 17 of the Law on Tax Administration 2019 stipulates that taxpayers remain responsible for making accurate, truthful, and complete tax declarations, submitting tax dossiers on time, and taking legal responsibility for the accuracy and completeness of such dossiers and supporting documents.
Accordingly, transferring capital through an intermediary company does not eliminate or alter the tax obligations of individuals or enterprises in respect of capital transfer transactions.
V. Why should you seek legal advisory services from NPLaw for tax advisory on capital transfer?
The above provides guidance on tax advisory in capital transfer as presented by NPLaw. With a team of experienced lawyers and legal professionals, NPLaw delivers reputable and professional legal services, ensuring optimal protection of clients’ lawful rights and interests. For legal assistance, please contact NPLaw for consultation and support.
The information provided herein is for reference purposes only. For detailed advice on specific cases, please contact NPLaw Firm directly.
