Transferring all capital to Vietnamese investors — capital transfer tax

When a foreign investor exits Vietnam by transferring all of its capital to Vietnamese investors, the first question is always: what taxes apply, and how are they calculated? Since 1 October 2025, the Law on Corporate Income Tax 2025 applies a new calculation for foreign-organization sellers; individual foreign sellers are governed by the Law on Personal Income Tax 2025, effective 1 July 2026.

1. Legal basis

• Law on Corporate Income Tax 2025 (67/2025/QH15), effective 1 October 2025, applicable from the 2025 CIT tax period. Article 3(2): income from capital transfers is taxable CIT income.
• Law on Personal Income Tax 2025 (109/2025/QH15), effective 1 July 2026, replacing the entire old PIT framework. Article 13(1) and Article 23(1): capital transfer tax calculation methods.

2. Foreign-organization sellers: 2% on the transfer price

This is the most important new rule effective 1 October 2025. A foreign organization transferring contributed capital in a Vietnamese LLC or shares in an unlisted joint-stock company is subject to CIT of:

Tax payable = 2% x transfer price

The tax is calculated on the total transaction value, with no deduction of cost basis or expenses — the liability arises even on a loss-making deal. The old rule (before 1 October 2025) was 20% on the transfer gain (sale price minus purchase price minus related expenses).

Example: a foreign fund sells 100% of its capital in a Vietnamese LLC for VND 50 billion. Tax = 2% x 50 billion = VND 1 billion, regardless of the original cost basis.

3. Foreign-individual sellers: 20% on income or 2% on sale price

From 1 July 2026, the Law on PIT 2025 applies uniformly to both resident and non-resident individuals:

• Method 1 (standard): tax = 20% x taxable income, where taxable income = sale price − purchase price − reasonable related expenses, per transfer;
• Method 2 (cost basis undeterminable): tax = 2% x sale price.

Important distinction: transfers of securities (listed shares, etc.) remain subject to PIT of 0.1% of the transfer price per transaction — the capital-transfer formula above does not apply.

4. Vietnamese buyers: withholding obligations

Where the seller is a foreign organization or individual, the Vietnamese buyer or paying entity must withhold, declare, and pay tax on the seller’s behalf. The transfer contract should clearly address:

• Which party bears the tax and any gross-up/net price adjustment mechanism;
• The timing of the tax obligation — current practice counts from the effective date of the capital transfer agreement (SPA);
• Document provision and filing cooperation duties.

5. Double tax treaties (DTA)

Investors from countries with a DTA with Vietnam should assess eligibility for treaty exemptions or reductions. The burden of proof lies with the taxpayer — prepare supporting documents (tax residency certificates, audited financial statements, etc.) from the deal-planning stage.

6. Pre-signing checklist

1. Identify the seller’s status (foreign organization vs. individual) → apply the correct tax formula;
2. Determine when the income arises to apply the right legal framework (before/after 1 October 2025 for organizations; before/after 1 July 2026 for individuals);
3. Prepare cost-basis and expense documentation from the initial investment stage;
4. Agree clearly on the tax bearer and withholding mechanism in the SPA;
5. Assess DTA applicability;
6. File and pay on time; settle through the direct investment capital account.

Content drafted by the FLAW AI Legal Council, pending QA Council review before approval. This article is for general information only and does not replace legal advice for any specific case.