Tax Advisory for FDI Companies

Tax advisory for FDI companies: who is this service for?

• FDI companies newly established or seeking CIT incentives for investment projects, needing confirmation of eligibility conditions and maintenance obligations.
• Operating FDI companies with transactions involving parent, group, or related parties needing assessment of related-party transaction and transfer pricing obligations.
• Foreign investors acquiring businesses, contributing capital, buying shares, or restructuring in Vietnam needing tax risk review of the target before signing.
• Businesses signing contracts with foreign contractors or service providers needing to determine withholding and on-behalf FCT payment obligations.
• FDI companies under tax inspection or audit, facing back-tax assessments, penalties, or disagreeing with tax decisions and needing to complain or sue.
• FDI companies preparing VAT refunds, profit repatriation, dissolution, or project transfer and needing to handle arising tax obligations.

Common legal issues clients face

Many M&A deals close without reviewing the target’s historical tax liabilities. The buyer later discovers back taxes and late-payment interest from prior inspection periods — and the SPA has no protection clause for this risk. Tax due diligence is an unskippable step before signing the SPA.

FDI companies enjoying CIT incentives but not tracking annual incentive maintenance conditions: changing project location, adding non-incentivized business lines, or missing capital and labor commitments. Upon tax authority review, incentives are revoked retroactively and the company must repay all exempted/reduced tax plus late-payment interest.

Parent–subsidiary relations are fertile ground for transfer pricing risk: management fees, intra-group service fees, intra-group loan interest, and intangible asset transfers priced without arm’s-length documentation. Upon tax assessment, the company not only pays more tax but loses control over its internal pricing policy in subsequent periods.

Contracts with foreign counterparties often fail to separate the FCT-taxable value from the non-taxable portion, or to assign withholding responsibility. Disputes arise when the tax authority collects from the Vietnamese party as the withholding and paying agent.

VAT refund dossiers get routed to pre-refund inspection as high-risk, dragging on for months while the company’s cash flow is frozen. Many businesses prepare refund dossiers as pure accounting procedures, only discovering they lack legal grounds for deductions when asked to explain.

A new point many businesses haven’t updated: from 01/01/2025, Law No. 56/2024/QH15 (amending the 2019 Tax Administration Law) abolished the right to file supplementary tax returns after the tax authority announces an inspection/audit decision. From 01/7/2026, the 2025 Tax Administration Law (108/2025/QH15, replacing the 2019 Law) shortens the supplementary filing window to 05 years from the expiry of the filing deadline for the tax period with errors (clause 5, Article 12); for inspected/audited periods, taxpayers may file explanatory supplements with the tax authority if dossiers have errors (point d, clause 5, Article 12).

What FLAT LAW FIRM does

• Reviewing tax risks in M&A, capital contribution, share purchase, and restructuring transactions: the target’s historical tax obligations, back-tax risks, and designing tax protection clauses in sale contracts.
• Advising on CIT incentive eligibility conditions for new investment projects, incentive maintenance during operations, and assessing the global minimum tax impact on the real value of incentives.
• Advising on related-party transactions and transfer pricing: determining scope, documentation exemption thresholds, reviewing internal pricing policies, and preparing arm’s-length documentation under Decree 132/2020/NĐ-CP (as amended by Decree 20/2025/NĐ-CP).
• Advising on foreign contractor tax in contracts with foreign counterparties: determining taxable subjects, separating the taxable value, and assigning withholding and on-behalf payment obligations under the current framework (Circular 103/2014/TT-BTC has been abolished: the CIT portion expired from 12/3/2026 under Circular 20/2026/TT-BTC, the whole from 01/7/2026 under Circular 89/2026/TT-BTC).
• Advising on double taxation agreement application: eligibility conditions, notification procedures, and preparing tax residency documentation.
• Supporting high-risk VAT refund dossiers: reviewing deduction grounds and preparing explanations when subject to pre-refund inspection.
• Representing businesses working with tax authorities during inspections and audits: building legal positions, preparing explanatory letters, and protecting taxpayer rights under the Tax Administration Law.
• Complaining against administrative tax decisions and suing in administrative cases when disagreeing with tax authority decisions.
• Advising on tax obligations when repatriating profits through the direct investment capital account (DICA), transferring projects, dissolving FDI companies, or ceasing operations in Vietnam.

Implementation process

1. Receiving dossiers: financial statements, tax filings, inspection/audit decisions (if any), material contracts, and documents on ownership structure and intra-group transactions.
2. Determining review scope: by tax type (CIT, VAT, FCT, PIT for foreigners) or by event (M&A, incentives, inspection, refund).
3. Risk analysis: comparing the company’s reality against laws in force, identifying points of likely back-tax, penalties, or incentive ineligibility.
4. Risk report and handling plans: risk level per point, legal grounds, and options — self-supplementary filing, policy adjustment, preparing explanations, or complaints.
5. Implementation: drafting explanatory letters, working with tax authorities, preparing refund dossiers, or filing complaints and lawsuits as authorized.
6. Monitoring and updates: tracking competent authority progress and updating on new tax policies affecting the business.

Documents clients should prepare

• Financial statements for the last 02–03 years, CIT and VAT filings, and related tax returns.
• Investment registration certificate, incentive confirmation documents (if any), and evidence of incentive eligibility over the years.
• Material contracts: sale, intra-group loans, service contracts with parent or related parties, contracts with foreign contractors.
• Existing related-party transaction dossiers: internal pricing policies, related-party transaction appendices, pricing documentation (if prepared).
• Tax inspection and audit decisions, working minutes, and issued assessment, back-tax, and penalty decisions (if any).
• VAT refund dossiers filed or planned, with deduction documents.
• Charter, group ownership chart, and list of related parties.

Expected timeline

A tax risk review’s duration depends on company size, the number of tax periods to revisit, and intra-group transaction complexity. A review serving an M&A deal usually follows the deal’s overall timeline and must finish before SPA signing.

Key legal timelines: taxpayers may file supplementary returns within 05 years from the expiry of the filing deadline for the tax period with errors (clause 5, Article 12 of the 2025 Tax Administration Law (108/2025/QH15), effective 01/7/2026, replacing the 2019 Law; amended by Law No. 56/2024/QH15). The complaint limitation for administrative tax decisions is 90 days from receipt (2011 Law on Complaints); administrative lawsuit limitations follow the 2015 Law on Administrative Procedures. Delays can forfeit complaint and lawsuit rights even when the tax decision is wrong.

Common legal risks

• Buying a business without reviewing historical taxes, then bearing back taxes and late-payment interest from pre-transfer periods.
• Losing CIT incentives for failing to maintain eligibility, revoked retroactively with late-payment interest.
• Internal pricing policies without arm’s-length documentation, subject to tax assessment in transfer pricing inspections.
• Foreign contractor contracts without FCT obligation allocation, the Vietnamese party collected from as withholding and paying agent.
• VAT refund dossiers routed to pre-refund inspection, cash flow frozen for months.
• Discovering tax errors after the tax authority has announced an inspection/audit decision — no supplementary filing allowed under Law No. 56/2024/QH15.
• Confusing a law firm’s role with an accounting firm: expecting lawyers to do bookkeeping and filing, causing wrong coordination and gaps in internal accounting responsibility.

Legal updates through September 2026

The 2025 Corporate Income Tax Law (No. 67/2025/QH15), passed 14/6/2025, effective 01/10/2025 and applicable to the 2025 CIT tax period, replaces the 2008 CIT Law. Key new point for FDI companies: tiered rates by revenue — 15% for annual revenue not exceeding VND 3 billion, 17% for revenue over VND 3 billion to 50 billion, 20% for other cases; and an expanded taxpayer scope covering foreign businesses without a permanent establishment in Vietnam but operating via e-commerce or digital platforms, with taxable income determined by Vietnam-source origin.

The 2024 VAT Law (No. 48/2024/QH15), passed 26/11/2024, effective 01/7/2025 (some provisions from 01/01/2026), replaces the 2008 VAT Law. Key point directly affecting FDI companies: input VAT deduction requires non-cash payment documents for purchased goods and services (Article 14), except special cases set by the Government.

Law No. 56/2024/QH15 (amending 9 laws including the 2019 Tax Administration Law), effective 01/01/2025: taxpayers may file supplementary returns within 10 years from the filing deadline expiry of the period with errors, before the tax authority announces an inspection/audit decision; abolishes supplementary filing after the decision announcement and after conclusions/decisions; abolishes the right to claim interest on overpaid tax; expands refund decision authority down to Sub-department Chiefs. From 01/7/2026, these rules are replaced by the 2025 Tax Administration Law (108/2025/QH15): the supplementary window shortens to 05 years (clause 5, Article 12).

Decree 20/2025/NĐ-CP (issued 10/02/2025), amending Decree 132/2020/NĐ-CP on tax administration for businesses with related-party transactions, effective 27/3/2025 and applicable from the 2024 CIT tax period. Key amendments: adjusting related-party criteria via loans and guarantees (point d, clause 2, Article 5), adding related-party cases (points k, m), and transitional rules on non-deductible interest expenses for 2020–2023. The transfer pricing documentation exemption thresholds still apply: period revenue under VND 50 billion and total related-party transaction value under VND 30 billion (Article 18 of Decree 132/2020/NĐ-CP).

Global minimum tax: Resolution 107/2023/QH15 on supplementary CIT under global anti-base-erosion rules, effective 01/01/2024. FDI companies in multinational groups with consolidated revenue of EUR 750 million or more may owe top-up tax, eroding the real value of granted CIT incentives — a factor to include when evaluating incentives for new projects. For details on incentive forms, determination procedures, and incentive maintenance conditions, see Investment Incentives for FDI Projects.

Foreign contractor tax: Circular 103/2014/TT-BTC — the guiding instrument for over a decade — has expired (the CIT portion abolished from 12/3/2026 under clause 7, Article 10 of Circular 20/2026/TT-BTC; the whole abolished from 01/7/2026 under Article 99 of Circular 89/2026/TT-BTC). Current framework: foreign organizations and individuals doing business in Vietnam or earning Vietnam-source income fulfill tax obligations under the 2025 Tax Administration Law, Decree 252/2026/NĐ-CP, Circular 89/2026/TT-BTC, and Circular 20/2026/TT-BTC (CIT), with withholding and on-behalf payment obligations on the Vietnamese contracting party.

Full texts of the above instruments can be found at the Government’s legal normative documents system. Page content should be cross-checked against the instruments in force at the time of application to each specific file.

Why choose FLAT LAW FIRM?

FLAT LAW FIRM approaches tax from a litigator and deal lawyer’s angle: not just computing the right tax figure, but assessing the legal risk behind each number — back-tax exposure, grounds to defend positions with tax authorities, and winning chances in complaints and lawsuits. Our FDI and M&A practice lets us spot tax risks inside deal structures, contracts, and ownership setups rather than just on returns. Our team works in Vietnamese, Chinese, and English, suited to FDI companies and multinational groups.

Service boundaries are set clearly upfront: we give legal advice on tax — risk reviews, plan design, representing businesses with tax authorities, and dispute resolution. We don’t do bookkeeping, don’t file taxes for clients, and don’t provide tax agency services. Businesses still need in-house accountants or accounting firms for recording and periodic filing; we coordinate with them at the legal layer — for the overall compliance picture, see Corporate Legal Compliance.

Frequently Asked Questions

Useful links

You should talk to a lawyer if:

• Your business is about to sign an M&A, capital contribution, or restructuring deal without having reviewed the target’s tax risks.
• An FDI project is enjoying or planning to seek CIT incentives but is unsure about incentive maintenance conditions.
• The business transacts with its parent or group companies and lacks arm’s-length documentation.
• The business contracts with foreign contractors or service providers without allocating FCT obligations.
• The business has received a tax inspection/audit notice or disagrees with a back-tax or penalty decision.
• The business is preparing a VAT refund, profit repatriation, project transfer, or dissolution and needs to handle arising tax obligations.