Tax on Investment Project Transfers in Vietnam

What is an investment project transfer?

An investment project transfer is the investor’s transfer of all or part of an investment project to another investor, including the transfer of project-attached assets (factories, machinery), land use rights, and all rights and obligations of the investor under the investment registration certificate. After transfer, the transferee becomes the project’s investor, succeeding the transferor’s legal position regarding the project.

The distinction from capital transfers: in capital transfers, the project company does not change — only the company’s owners change. In project transfers, the project itself (as a “package” of assets and rights) is transferred; the old company may continue to exist with other activities, or terminate after transferring its sole project.

In practice, the choice between these two structures depends on many factors: whether the buyer wants to inherit the entire legal history, tax debts, and potential disputes of the project company (share deal — yes; asset deal — more limited); which administrative procedures are simpler; and — no less important — the transaction’s total tax obligations under each structure.

Is income from project transfers taxable?

Yes. Point c, Clause 2, Article 3 of CIT Law No. 67/2025/QH15 clearly provides that “income from transfers of investment projects, transfers of rights to participate in investment projects, and transfers of mineral exploration, exploitation, and processing rights” is subject to CIT. This regulation is effective from 01/10/2025 and applies from the 2025 CIT tax period.

The scope covers both whole-project and partial-project transfers (e.g., transferring one phase or one item), as well as transfers of rights to participate in investment projects where multiple investors participate.

How tax is calculated

Income from investment project transfers is included in the enterprise’s taxable CIT income under the general formula at Article 7, Law 67/2025/QH15:

Taxable income = Revenue − Deductible expenses + Other income

Where, for investment project transfer activities:

• Revenue is the total project transfer value under the contract — including the value of assets, land use rights, and project-attached rights transferred;
• Deductible expenses are the remaining value of transferred assets, investment costs actually incurred in the project, and other reasonable transfer expenses with complete invoices and documentation;
• The positive difference is taxable income, subject to the standard CIT rate.

Unlike the 2%-on-transfer-price mechanism for foreign enterprises transferring capital, income from investment project transfers is calculated under the income formula (revenue minus expenses) above. This is one reason why choosing a share deal or asset deal structure directly affects tax payable — especially when the project has received large investment (high cost), tax on income may be significantly lower than tax on total value.

Special loss offset rules

This is the most important technical point of the project transfer tax regime, and the point businesses most often miscalculate.

Under Article 6, Decree 320/2025/ND-CP (implementing the 2025 CIT Law): where an enterprise has real estate transfer activities, investment project transfers, or transfers of rights to participate in investment projects at a loss, such loss may not be offset against taxable income of production and business activities enjoying tax incentives that have income. Conversely, income from investment project transfers may also not be offset against income of production and business activities enjoying tax incentives.

In other words, investment project transfer activities are “isolated” from the ordinary loss/income offset mechanism when the enterprise has incentive-enjoying activities. Enterprises with projects enjoying CIT incentives (e.g., projects in industrial parks, high-tech projects) need to compute the transfer activity’s tax stream separately, not merged with production and business activities.

Specifically for transfers of mineral exploration, exploitation, and processing investment projects (and participation, exploration, exploitation, and processing rights): taxable income must be determined separately for tax declaration, and losses and income may not be offset against production and business activities in the tax period.

Are tax incentives transferred?

Two incentive issues must be separated:

First, is income from project transfers entitled to preferential rates? No. Law 67/2025/QH15 provides that the preferential 15% and 17% rates do not apply to income from investment project transfers (except transfers of mineral processing projects), transfers of rights to participate in investment projects, and transfers of mineral exploration, exploitation, and processing rights. Gains from selling projects are always subject to the standard rate, even if the project itself enjoys incentives.

Second, does the transferee inherit the project’s tax incentives? This is a question of great commercial value — a project enjoying time-limited CIT exemption/reduction is far less attractive if the incentives “disappear” upon change of ownership. In principle, tax incentives attach to investment projects meeting incentive conditions; when the project is transferred and continues to meet the conditions (sector, location, scale), the transferee has grounds to continue enjoying incentives for the remaining period. However, incentive transfer depends on the competent authority’s decision during the investment registration certificate adjustment — this must be clarified before signing the contract, not after payment.

Parallel legal procedures: project transfers under the Investment Law

Tax obligations are only half the transaction. On the investment law side, investment project transfers must undergo investment registration certificate adjustment procedures under Investment Law No. 143/2025/QH15 — the transferee investor must meet investment conditions applicable to the project (market access conditions, financial capacity, deposits, etc.).

The practical sequence of a project transfer transaction typically includes: legal due diligence of the project (land legal status, licenses, financial obligations to the State, disputes) → negotiation and signing of the transfer contract → investment registration certificate adjustment procedures → asset handover, payment → tax declaration and payment. Legal and tax steps interweave — e.g., the transferor’s outstanding land financial obligations may become preconditions for the transferee, and affect the transfer price as well as the tax base.

See tax due diligence in M&A transactions on how to review a project’s tax obligations before deciding to buy.

Common risks

Confusing capital transfers with project transfers. The two transactions are subject to completely different tax regimes (2% on price for foreign enterprises transferring capital; tax on income for project transfers). Misidentifying the transaction’s nature leads to wrong declarations and back-collection and penalties.

Wrong loss offset. Using losses from project transfers to offset income of incentive-enjoying activities is a common violation, disallowed by tax authorities upon finalization.

Not clarifying the fate of the project’s tax incentives. The buyer prices on the assumption the project continues to enjoy incentives, but after transfer the competent authority does not approve the transfer — the deal value is seriously affected without contractual protection clauses.

Unresolved land financial obligations. Outstanding land use fees and land rents of the project can be very large and are usually the investor’s (project’s) obligations. Failing to review these carefully in due diligence means buying the debt into the transfer price.

When to contact a lawyer

• Before choosing the transaction structure: comparing total tax obligations and legal risks between share deals and asset deals;
• Needing comprehensive legal due diligence of the project: land, licenses, financial obligations, disputes, investment condition compliance;
• Negotiating project transfer contracts: clauses on tax incentives, outstanding financial obligations, warranties, and indemnities;
• Carrying out investment registration certificate adjustment procedures for the transferee;
• Declaring project transfer tax and handling loss offset and incentive issues;
• Resolving disputes arising after project transfers.

How FLAT LAW FIRM assists

• Advising on transaction structure choice (capital transfer / project transfer) from overall tax and legal perspectives;
• Legal due diligence of investment projects: land, licenses, financial obligations to the State, potential disputes;
• Drafting and negotiating investment project transfer contracts;
• Carrying out investment registration certificate adjustment procedures under the Investment Law;
• Computing project transfer tax obligations and advising on incentive treatment upon transfer — in coordination with FLAT’s tax consulting services for FDI enterprises.

Frequently asked questions

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