When a Chinese group decides to scale down its operations in Vietnam — or conversely, a Vietnamese enterprise wants to exit the Chinese market — the board's first questions are always the same: how long will the procedures take, how much tax is payable, and can the money be brought home. This article directly compares the legal framework for capital withdrawal from Vietnam and China along three axes: termination and dissolution procedures, tax on exit transactions, and foreign exchange control when remitting funds abroad (for the general context, see foreign investment in Vietnam).
A note on scope: FLAT's FDI Exit article series goes deep into purely Vietnamese withdrawal procedures (with the 12-step FDI project termination checklist as its backbone). This article belongs to the China Desk — a two-way Vietnam–China comparison for Chinese investors holding capital in Vietnam and Vietnamese enterprises holding capital in China.
Table of contents
- 1. Context: why compare
- 2. Overview comparison table
- 3. Detailed analysis of each difference
- 4. Notable similarities
- 5. Common investor risks
- 6. Practical recommendations
- 7. Frequently asked questions
1. Context: why compare
Three reader groups need this comparison. First, Chinese groups operating factories and trading companies in Vietnam and considering restructuring their regional investment portfolio — they need to know how Vietnamese withdrawal procedures differ from their "home turf" so they do not wrongly apply Chinese legal thinking. Second, Vietnamese enterprises that have invested or are investing in China (offices, subsidiaries, joint ventures) and want to exit — they face China's 2023 Company Law and the 10% withholding tax mechanism. Third, the legal and finance teams of multinational groups who must explain to the board why the same capital sale transaction carries such different tax costs and processing times in the two countries.
In practice, the biggest shock usually lies in tax: Vietnam taxes foreign enterprises' capital transfers at 2% on the transfer price (even at a loss), while China taxes 10% on the gain (no gain, no tax). These two completely different tax philosophies determine the exit strategy — and that is why any decision to withdraw capital from Vietnam or China needs an evidence-based comparison before signing.
2. Overview comparison table
| Criterion | Vietnam | China | Notes |
|---|---|---|---|
| 1. Legally recognized exit forms | Two groups of forms: (i) capital transfer — selling capital contributions or shares to another investor; (ii) termination of the investment project (Article 36 of Investment Law 143/2025/QH15) combined with enterprise dissolution (Article 207 of Enterprise Law 59/2020/QH14, amended by Law 76/2025/QH15). | Two corresponding groups: (i) equity/capital transfer (股权转让); (ii) company dissolution under the 5 cases at Article 229(1) of the 2023 Company Law (expiry of term; shareholders' meeting resolution; merger/division; license revocation; court-ordered dissolution), followed by mandatory liquidation. | Both systems recognize the two exit routes: selling to someone else or closing the business. The difference lies in procedural detail and tax of each route. |
| 2. Investment project termination and enterprise dissolution procedures | Two independent procedural layers. Project layer: an investor voluntarily terminating notifies the investment registration authority within 15 working days and self-liquidates project assets (Article 66(2)(a) and 66(8)(a) of Decree 96/2026/ND-CP). Enterprise layer: adopt a dissolution resolution, send it to the business registration authority, the tax authority and employees within 07 working days, and publish it on the National Business Registration Portal (Article 208 of the Enterprise Law). | One unified law. No separate investment registration certificate concept as in Vietnam: the company dissolves under the Company Law and registers with the market supervision and administration authority (市场监督管理部门). Simple cases may use the simplified deregistration procedure (Article 240 of the 2023 Company Law). | Vietnam is more complex with two procedural layers (project + enterprise) while China consolidates into one gateway — the Company Law. Chinese investors in Vietnam often miss the investment-project layer. |
| 3. Deadlines and obligations to creditors and employees in liquidation | The dissolution resolution must include a plan for handling labor contract obligations; the debt settlement plan is sent to creditors while financial obligations remain. Debt payment order under Clause 5, Article 208 of the Enterprise Law: employees' wages, allowances and insurance first, then tax debts, then other debts. File the dissolution dossier within 05 working days of full debt payment; after 180 days without objection, the business registration authority updates the legal status. | The director is the liquidation obligor and must form a liquidation committee within 15 days from the dissolution event; delays causing damage trigger compensation liability (Article 232). The committee notifies creditors within 10 days and makes a public announcement within 60 days. Payment order: liquidation expenses, employees' wages/insurance/compensation, taxes, then other debts (Articles 235, 236). Distributing assets to shareholders before debts are settled is prohibited; insufficient assets trigger bankruptcy proceedings (Article 237). | China sets hard, detailed deadlines (15 days to form the committee, 10 days to notify, 60 days to announce) and places personal compensation liability on the director for delays. Vietnam is more flexible on deadlines but strict at the 180-day objection waiting stage. |
| 4. CIT on foreign enterprises' capital transfers | 2% tax rate on the transfer price, applying to both direct and indirect transfers, under Point i, Clause 3, Article 12 of Decree 320/2025/ND-CP (effective from 15/12/2025, guiding Corporate Income Tax Law 67/2025/QH15 effective from 01/10/2025). No cost deduction: the tax obligation arises even when the transaction is at a loss. | A non-resident enterprise with no establishment in China is taxed at 10% on income from share transfers (only on the gain), withheld at source by the payer under China's Enterprise Income Tax Law and its Implementation Regulations (Article 91). The 10% rate may be reduced under the double taxation avoidance agreement. | The core difference of this comparison: Vietnam taxes the price (transfer revenue), China taxes the gain. Loss or thin-margin transactions: Vietnamese tax is heavier. Large-gain transactions: China's 10% on the gain may exceed Vietnam's 2% on the price. |
| 5. PIT on individuals' capital transfers | An individual transferring shares of a joint-stock company (even unlisted) is classified as a securities transfer, taxed at 0.1% on the transfer price; an individual transferring capital contributions in a limited liability company or partnership is taxed at 20% on taxable income (Decree 253/2026/ND-CP, effective 01/7/2026). | Individuals are taxed at 20% on gains from capital contribution/share transfers under China's Personal Income Tax Law; gains from transferring shares of listed companies are temporarily exempt. | Vietnam distinguishes by enterprise type (0.1% for shares, 20% on income for LLC capital contributions); China applies a uniform 20% on gains, with an exemption for listed shares. |
| 6. Tax exemption for intra-group restructuring | Excluded from the 2% tax scope if the intra-group ownership restructuring transaction does not change the ultimate parent company and generates no income (Point i, Clause 3, Article 12 of Decree 320/2025/ND-CP). Circular 20/2026/TT-BTC (Article 7, Clause 2, Point m) sets 4 detailed conditions for exemption. | The special reorganization regime (特殊重组) allows tax deferral: the transferor keeps the original tax basis (no gain recognized at transaction time) where conditions on equity-payment ratios and business continuity are met. | Both countries have preferential mechanisms for intra-group restructuring, but they differ: Vietnam exempts outright where conditions are met, China defers tax (gain recognized in a later period). Both sets of conditions are strict and require careful dossier preparation. |
| 7. Foreign exchange control on outbound remittance | Foreign investors remit capital, profits and lawful income abroad through the direct investment capital account after completing financial obligations to the State (Investment Law 143/2025/QH15; the foreign exchange administration framework under the Foreign Exchange Ordinance and Circular 06/2019/TT-NHNN). | Remittance is made through commercial banks with a dossier evidencing authenticity, including proof of completed tax obligations; the foreign exchange registration of the direct investment needs updating or cancellation upon exit. Banks act as the practical gatekeeper. | The common principle is the same — complete tax obligations before remitting — but Vietnam channels through the dedicated direct investment capital account while China relies on banks checking each transaction's dossier. |
| 8. Strategy choice: selling the stake or dissolving | Selling is faster, preserves operating value, but bears 2% tax on the price even at a loss. Dissolution suits ceased businesses but runs through two procedural layers and the 180-day waiting period. In practice, many investors sell to domestic partners to exit quickly. (See analysis: FDI exit — bankruptcy, dissolution or transfer.) | Selling shares bears 10% tax on the gain (no tax if no gain), advantageous for low-price or loss sales. Dissolution under the 2023 Company Law has a clear timeline but demands high compliance discipline from the director (15-day liquidation committee duty, personal compensation liability). | No one-size-fits-all answer: in Vietnam, the trade-off is 2% tax on price versus dissolution time; in China, it is 10% tax on the gain versus the manager's personal liability risk in liquidation. |
3. Detailed analysis of each difference
3.1. Tax on "price" (Vietnam) versus tax on "gain" (China): the core difference
This is the strategy-defining difference. From 15/12/2025, under Point i, Clause 3, Article 12 of Decree 320/2025/ND-CP guiding Corporate Income Tax Law 67/2025/QH15, foreign enterprises transferring capital in Vietnam — whether direct transfers of capital contributions or shares, or indirect transfers through an offshore parent — are taxed at 2% on the total transfer price. Because no cost deduction is allowed, a loss sale of VND 10 billion still generates VND 200 million in tax.
In China, the philosophy is the opposite: a non-resident enterprise is taxed at 10% only on the income portion (sale price minus cost and reasonable expenses), withheld at source by the payer. Break-even or loss transactions generate no tax. The practical consequence: for exits from loss-making projects or thin-margin deals — very common when withdrawing from a market — the tax cost in Vietnam is often significantly higher than in China. Conversely, for large-gain deals (e.g., cost of VND 20 billion, sale price of VND 100 billion), China's 10% on the VND 80 billion gain is VND 8 billion, while Vietnam's 2% on the VND 100 billion price is only VND 2 billion. In practice, investors must model both scenarios before finalizing the transaction structure rather than defaulting to home-country experience. (See also: tax finalization upon dissolution and FDI project termination.)
3.2. Two procedural layers in Vietnam versus one unified law in China
Chinese investors are often surprised to find that withdrawing from Vietnam requires two independent procedural layers. The first layer is termination of the investment project under Article 36 of Investment Law 143/2025/QH15 (effective from 01/3/2026): where the investor voluntarily terminates, it must notify the investment registration authority within 15 working days and self-organize the liquidation of project assets under Article 66(2)(a) and 66(8)(a) of Decree 96/2026/ND-CP. The second layer is enterprise dissolution under Articles 207 and 208 of the Enterprise Law: adopt a dissolution resolution, send it to the business registration authority, the tax authority and employees within 07 working days, and publish it on the National Business Registration Portal. (For step-by-step detail in Vietnam, see FDI investment project termination and FDI enterprise dissolution.)
In China, there is no separate investment registration certificate concept as in Vietnam. All procedures for closing a business fall under the 2023 Company Law: dissolution under one of the 5 cases at Article 229(1), registration with the market supervision authority, and simple cases may use the simplified deregistration procedure under Article 240. One gateway, one law — structurally simpler, but in exchange the deadlines and personal liabilities are set very strictly as analyzed below.
3.3. Liquidation: the Chinese director's personal obligations
What surprises many Vietnamese managers most when handling dissolution in China is Article 232 of the 2023 Company Law: the director is the liquidation obligor and must form a liquidation committee within 15 days from the dissolution event. Failure to perform liquidation duties in time causing damage to the company or creditors triggers compensation liability — personal liability, not merely the legal person's liability.
Next, the liquidation committee must notify creditors within 10 days and make a public announcement within 60 days (Article 235); the payment order is fixed: liquidation expenses, employees' wages, social insurance and compensation, taxes, then other debts; the remainder is distributed in proportion to capital contributions (Article 236). Distributing assets to shareholders before debts are fully settled is strictly prohibited; if assets are insufficient to pay debts, the committee must move to bankruptcy proceedings (Article 237). Compared with Vietnam — where Article 208 of the Enterprise Law sets a similar debt payment priority (employees first, taxes next, other debts last) but does not place direct personal compensation liability on the manager in the liquidation provisions — the Chinese framework demands far higher deadline compliance discipline from the management board.
3.4. Indirect transfers: the tax trap in Vietnam that Chinese investors often miss
A high-impact change from late 2025: Decree 320/2025/ND-CP applies the 2% tax to indirect capital transfers as well. In practice, many Chinese groups hold their Vietnamese companies through intermediate companies in Hong Kong, Singapore or the British Virgin Islands. When the group sells the intermediate company to a third party, formally no transaction occurs in Vietnam — but in substance, indirect ownership of the Vietnamese enterprise has shifted, and the transaction remains subject to the 2% tax on the transfer price in Vietnam.
This is a common trap because conventional thinking assumes "selling an offshore company means tax only offshore". In China, indirect transfers are also monitored by the tax authority (reporting mechanisms and anti-transfer-pricing rules), but Vietnam's approach — directly taxing 2% on the indirect transaction value — is simpler and harder to avoid. Any multi-tier holding structure should have its Vietnamese tax obligations reviewed before signing a group-level transfer agreement.
3.5. Foreign exchange: the direct investment capital account (Vietnam) versus bank dossier checks (China)
The common principle of both countries is the same: complete financial and tax obligations to the State before remitting funds abroad. The difference lies in the control mechanism. In Vietnam, a foreign investor's cash flows go through the direct investment capital account — a dedicated account type at a licensed bank through which all capital contributions, capital transfers and outbound remittances must pass. The account mechanism creates a clear "rail": money in and money out both leave a trail.
In China, control is more decentralized: the commercial bank where the enterprise holds its account acts as the gatekeeper, reviewing the dossier evidencing the authenticity of each remittance transaction — with proof of completed tax obligations as a mandatory component. At the same time, the foreign exchange registration of the direct investment needs updating or cancellation upon the investor's exit. In practice, the most common snag in both countries is the same: the enterprise wants to remit before tax finalization is complete and gets refused or held by the bank. The lesson is to always schedule tax finalization before the remittance schedule, with a reasonable time buffer. (See also: FDI capital repatriation — DICA account and foreign exchange management.)
4. Notable similarities
Besides the differences, there are four similarities that investors from both countries often do not expect. First, both Vietnam and China recognize and protect the foreign investor's right to withdraw capital — neither side prohibits investors from selling their stake or closing the business to exit the market. Second, both systems put employees first in the liquidation payment order: employees' wages, insurance and allowances take priority over tax debts and other debts. Third, both countries have tax preferential mechanisms for intra-group restructuring — Vietnam exempts tax where conditions are met, China defers tax under the special reorganization regime. Fourth, both prohibit distributing remaining assets to owners before debts are fully settled, and both move to bankruptcy proceedings when assets are insufficient to pay debts. These commonalities show that while technical details differ, the creditor- and employee-protection logic of the two systems is consistent — an investor familiar with one side will not be shocked by the principles of the other.
5. Common investor risks
Risk 1: Applying China's "tax on gain" thinking to Vietnam. Symptom: a Chinese group's board approves the sale of its Vietnamese subsidiary assuming tax only on the gain, only to discover at finalization that 2% tax applies to the entire sale price — even at a loss. Cause: habits from the Chinese tax system where non-resident enterprises pay only 10% on the gain. Prevention: model the tax obligation under the correct Vietnamese formula (2% × transfer price) from the valuation stage, before price negotiation.
Risk 2: Confusing investment project termination with enterprise dissolution in Vietnam. Symptom: the enterprise completes dissolution under the Enterprise Law but forgets the investment project termination procedure, or vice versa — leaving the legal dossier half-done and unable to close the direct investment capital account. Cause: in China there is only one gateway — the Company Law — so investors assume Vietnam is the same. Prevention: build a two-layer procedure checklist from the start, with a dedicated owner for each layer.
Risk 3: Missing tax obligations on indirect transfers. Symptom: the group sells an offshore intermediate company without declaring tax in Vietnam, then faces back-tax and penalties when the tax authority traces the cash flow. Cause: Decree 320/2025/ND-CP extended the 2% tax to indirect transfers from 15/12/2025 — still new, so many groups have not updated. Prevention: review whether every group-level transfer changes indirect ownership in Vietnam, before signing.
Risk 4: Assuming intra-group restructuring is automatically tax-exempt. Symptom: transferring capital between group companies without preparing dossiers evidencing the 4 conditions under Circular 20/2026/TT-BTC, then having the exemption denied and the 2% tax imposed by the tax authority. Cause: the conditions "no change in ultimate parent company" and "no income arising" are interpreted far more strictly than commonly thought. Prevention: send an official letter to the directly managing tax authority and prepare full evidencing dossiers before the transaction.
Risk 5 (reverse direction): A Chinese company director delaying liquidation committee formation. Symptom: after the dissolution resolution, management delays forming the liquidation committee within 15 days, and when creditors sue, the director bears personal compensation liability under Article 232 of the 2023 Company Law. Cause: Vietnam has no equivalent provision placing direct personal liability like this, so Vietnamese managers are complacent. Prevention: immediately upon the dissolution decision in China, form the liquidation committee and keep documents evidencing the timeline.
Risk 6: Remitting funds abroad before completing tax obligations. Symptom: sale proceeds held by the bank, breaking the payment schedule to the parent group. Cause: both Vietnam and China require tax obligations to be completed before remittance, but enterprises often schedule remittance too close to the signing date. Prevention: make tax finalization a condition precedent in the capital transfer agreement, with a minimum buffer for administrative procedures.
6. Practical recommendations
Phase 1 — Before deciding to exit. Model the tax cost of both the sale and dissolution options, applying each country's correct formula (Vietnam: 2% on price; China: 10% on gain for non-resident enterprises). Review the company charter and related contracts on termination conditions and existing shareholders' preemptive rights. Check whether the transaction qualifies for intra-group tax exemption/deferral and prepare evidencing dossiers early. For multi-tier ownership structures, assess indirect transfer tax obligations in Vietnam.
Phase 2 — During the exit. Strictly observe the deadlines: in Vietnam, notify investment project termination within 15 days and send the dissolution resolution within 07 working days; in China, form the liquidation committee within 15 days, notify creditors within 10 days and make the public announcement within 60 days. Complete tax finalization and pay all taxes arising from the transaction before executing any remittance order. Keep full records of transfer contracts, payment vouchers, tax returns and tax payment receipts — this is the dossier the bank will require for remittance.
Phase 3 — After completing the exit. In Vietnam, close the direct investment capital account after all obligations are completed and keep the bank's confirmation. In China, update or cancel the foreign exchange registration of the corresponding investment. Retain all transaction dossiers for at least the tax inspection statute of limitations of each country in case the tax authority requests explanations later. Finally, update the outbound investment report (if any) in the investor's home country to close the compliance file.
7. Frequently asked questions
Should an investor sell its stake to a partner or dissolve the company when exiting Vietnam? It depends on the objective. Selling the stake (transferring capital contributions or shares) is usually faster and preserves the operating value of the business, but a foreign enterprise selling capital is taxed at 2% on the transfer price even if the transaction is at a loss (Point i, Clause 3, Article 12 of Decree 320/2025/ND-CP). Dissolution suits businesses that have ceased operations with no transferable value, but the procedure runs through two layers: investment project termination (Article 36 of Investment Law 143/2025/QH15) and enterprise dissolution (Articles 207 and 208 of the Enterprise Law). In practice, investors should model the tax cost and timeline of both options before deciding.
Is selling a Vietnamese subsidiary to a Chinese parent exempt from capital transfer tax? It can be, if all conditions for tax exemption on intra-group ownership restructuring transactions are met: no change in the ultimate parent company of the participating parties that directly or indirectly own the Vietnamese enterprise after restructuring, and no income arising (Point i, Clause 3, Article 12 of Decree 320/2025/ND-CP). Circular 20/2026/TT-BTC (Article 7, Clause 2, Point m) sets 4 detailed conditions. Practice still has unclear points on application, so enterprises should send an official letter to the directly managing tax authority before proceeding.
Is a loss-making capital transfer in Vietnam taxable? Yes, if the seller is a foreign enterprise. From 15/12/2025, foreign enterprises transferring capital in Vietnam are taxed at 2% on the transfer price with no deduction of cost — meaning the tax obligation arises even if the transaction is economically at a loss. This is the core difference with China, where a non-resident enterprise is taxed at 10% only on the gain (no gain, no tax).
How much tax does a Vietnamese enterprise pay when selling shares in a Chinese company? As a non-resident enterprise in China with no permanent establishment there, a Vietnamese enterprise is subject to Chinese corporate income tax at 10% on income from share transfers, withheld at source by the payer. The 10% rate may be reduced under the Vietnam–China Double Taxation Avoidance Agreement (Article 13 on income from property transfers). The enterprise must also complete its tax obligations in Vietnam on this income under Corporate Income Tax Law 67/2025/QH15.
Can capital sale proceeds be remitted out of Vietnam or China immediately? Not automatically. In Vietnam, foreign investors remit funds abroad through the direct investment capital account after completing financial obligations to the State. In China, remittance is made through commercial banks with a dossier evidencing authenticity, including proof of completed tax obligations; the foreign exchange registration of the investment must also be updated or cancelled accordingly. Remitting before tax obligations are completed is one of the common reasons funds get held at the bank.
Need a lawyer who understands both systems?
Cross-border Vietnam–China exits require simultaneous coordination of corporate, tax and foreign exchange law of both countries — a single wrong link (liquidation deadlines, tax formulas, remittance sequencing) is enough to inflate transaction costs or stall for months. FLAT Law Firm's China Desk advises end-to-end from tax modeling and capital transfer agreement drafting to investment project termination, dissolution and outbound remittance procedures. Contact hotline 0988424851 for a Vietnam–China exit plan suited to your investment structure.
FIX2 (2026-09-29 ~15:00 +07, worker WORKER-10 — localization)
- Manually created from VI: full 12-section comparison, 8-criterion table, 5 detailed analyses, 6 risks, 3-phase recommendations, 5 FAQs, terminology table, legal basis, uncertain points.
- Core legal points preserved: 2% on transfer price (Decree 320/2025) even at a loss; China 10% on gain, reducible under DTA; two-layer project termination + dissolution; 15-day liquidation committee / 10-day creditor notice / 60-day announcement (China); intra-group exemption (VN) / tax deferral (CN); remittance after tax obligations completed.
- VI body links without verified locale URLs rendered as text; planned URLs kept in frontmatter, link wiring pending at publish.
- Canonical `/vn/vn-` pattern check: no hits. Enterprise Law 76/2025: cited as amendment only, no effective-date claim → no fix needed.
- YAML PASS; status: drafted; jpv-language-links present; hotline 0988424851.
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