Selling part of the capital to a Vietnamese partner sounds like a purely commercial deal, yet it changes the control nationality of the project on every certificate. Do not let the simple look of selling a stake to a Vietnamese partner to form a joint venture mislead: its consequences follow the project for its whole life, from tax and labour to the ability to exit.
1. The current legal framework
Every route inside converting a wholly foreign-owned company into a JV starts from Law on Enterprises 59/2020/QH14: Article 198 on division, 199 on separation, 200 on consolidation, 201 on merger, Articles 202-205 on conversion. The FDI-specific feature of converting a wholly foreign-owned company into a JV is its two layers: the enterprise layer under Law 59/2020 and the project layer under Law on Investment 143/2025/QH15 (replacing Law 61/2020 from 1 March 2026). under Article 44 of the Labour Code 45/2019/QH14, the enterprise takes over labour on reorganisation, and selling a stake to a Vietnamese partner to form a joint venture is not outside that obligation; severance allowance (Article 46) together with job-loss allowance (Article 47) of the same Code are two cost bases of selling a stake to a Vietnamese partner to form a joint venture. For tax codes and invoices, converting a wholly foreign-owned company into a JV must be checked against Circular 90/2026/TT-BTC (replacing Circular 86/2024/TT-BTC) and Law on Tax Administration 108/2025/QH15 from the planning stage.
2. Analysis on the facts
Deal and registration sequence. The foreign investor transfers part of its capital contribution or shares to the Vietnamese partner under Law on Enterprises 59/2020; the company registers the changed member/shareholder structure and amends the Investment Registration Certificate. If the company is a single-member LLC, adding a member means converting to a multi-member LLC and rebuilding the charter and members’ council mechanics — the most underrated step of the whole deal.
Finding and diligencing the buying partner. The right partner is not merely the one with money: they will share the duty to complete unpaid capital, appear in project filings and may hold veto power. Partner diligence covers real financial capacity, dispute history and the risk of being “stuck” when the investor later wants to exit further. There is no exchange for this — partners usually come from industry relationships, suppliers, major customers or M&A advisers with local networks.
The seller’s capital-transfer tax. Gain on the capital transfer by a foreign organisational investor bears Vietnamese corporate income tax through withholding operated by the buyer or the Vietnamese company declaring on its behalf; an individual investor pays personal income tax on capital-transfer income under Law on PIT 109/2025. A transfer price abnormally below independent valuation is the first point tax authorities review in sales to domestic partners.
3. Implementation sequence
For selling a stake to a Vietnamese partner to form a joint venture, the framework below is the one registration authorities apply consistently in most files:
- The first legal step of selling a stake to a Vietnamese partner to form a joint venture: the owner, the Members’ Council or the General Meeting of Shareholders adopts the reorganisation resolution or decision.
- Prepare the labour-use plan under Article 44 of the Labour Code 45/2019/QH14 and notify employees in the proper sequence in selling a stake to a Vietnamese partner to form a joint venture.
- The enterprise registration dossier arising from selling a stake to a Vietnamese partner to form a joint venture is filed with the Business Registration Office where the head office is located.
- The IRC needs a corresponding amendment whenever selling a stake to a Vietnamese partner to form a joint venture changes capital, investors or the project’s organisational form.
- After selling a stake to a Vietnamese partner to form a joint venture, do not forget to update the tax code, invoices, the ICA bank account and the sub-licences tied to the legal entity.
4. Risks and practical notes
The costliest mistake in converting a wholly foreign-owned company into a JV is locking the form by home-country habit and only then discovering the sector is restricted in Vietnam. With selling a stake to a Vietnamese partner to form a joint venture, a mistake corrected after the IRC has been issued always costs more than pre-checking, because the form change amends the project and the enterprise registration together. One question belongs at the very start of selling a stake to a Vietnamese partner to form a joint venture: what does leaving look like? For selling a stake to a Vietnamese partner to form a joint venture, a form that is simple to enter can be rigid to exit when the Vietnamese partner holds a veto in the joint venture.
5. Conclusion for the investor
Practical conclusion: converting a wholly foreign-owned company into a JV has no universal answer — the right answer is the one matching the sector, the ownership ratio and the exit plan of that specific project. While selling a stake to a Vietnamese partner to form a joint venture still lacks locked answers on sector, capital ratio and who controls the vote, no document should be signed; those three decide almost everything else in converting a wholly foreign-owned company into a JV.
Frequently Asked Questions
How does selling part of a wholly foreign-owned company to a Vietnamese partner work?
The investor transfers part of the capital to the Vietnamese partner; the company registers the new member structure and amends the Investment Registration Certificate; a single-member LLC gaining a member simultaneously becomes a multi-member LLC with a new charter and members’ council mechanics.
Where do I find a partner to buy the capital?
There is no central market for unlisted company capital: partners are usually industry players, suppliers, major customers or domestic financial investors, reached through M&A advisers’ networks. Wherever they come from, their financial capacity and dispute history must be diligenced like a standalone deal.
What is the capital-transfer tax?
A foreign organisational seller pays corporate income tax on the transfer gain, collected through withholding in Vietnam; an individual seller pays personal income tax on capital-transfer income under Law on PIT 109/2025. Selling at a market price backed by independent valuation is the best defence against tax reassessment.
This article has been quality-reviewed by the FLAW AI Legal Council