Chinese Investors Exiting Vietnam by Transferring Projects to Third-Country Buyers: Procedures on Both the Vietnamese and Chinese Sides and Transfer Tax

Exiting Vietnam by selling the project to a third-country partner is a genuinely two-ended transaction: the Vietnam end decides whether the project may be transferred and how tax is calculated; the China end decides whether the outbound investment file can be closed cleanly. Miss one end, and the closed deal still leaves a hanging file at the other.

Governing Instruments

The Vietnam side: two transfer routes and the approval gate

The investor has two structural exit routes: (1) transferring the investment project — selling all or part of the project itself (assets, rights and obligations of the project) to the transferee; under the Law on Investment 143/2025/QH15, the transfer must satisfy conditions: the transferee meets the investor conditions for the corresponding project and sector, the project is not under violation handling or has completed its prescribed obligations, and for projects requiring the investment registration authority approval of the transfer, approval must be obtained before execution; after the transfer, the investment registration certificate is adjusted or issued to the transferee. (2) Transferring capital in the project enterprise — selling the capital contribution or shares of the company operating the project; this route keeps the legal entity and the project intact, changing the shareholder level, with enterprise registration changes and investment registration adjustment as to the investor.

Attached conditions decide which route is feasible: a project tied to leased land — transferring the project together with land use rights must satisfy land law conditions (land financial obligations completed, term remaining, no dispute, correct purpose); transferring only the assets on the land while keeping the land is impossible if the land lease structure does not allow it. A project in a sector with conditional market access for foreign investors — the third-country transferee must meet the market access conditions of its own nationality and sector (the lists of sectors not yet accessible and conditionally accessible under the Law on Investment); a partner of another nationality may qualify in one sector but not another.

Transfer tax and the China-side procedures for closing the investment

On the Vietnam side, tax on the exit transaction follows the transaction nature: a direct capital transfer (the capital contribution in the project enterprise) bears corporate income tax on capital transfer income at 20% on the difference between the transfer price and the cost basis plus lawful transfer expenses — where the transferor is a foreign organisation without presence in Vietnam, declaration and withholding are effected through the project enterprise or the transferee under the contractor tax and tax administration mechanisms; a share transfer in securities form bears the deemed levy of 0.1% on the transfer price for foreign organisations under the applicable framework. The buyer must also factor in other transaction costs, and a transfer price between related parties is subject to related-party discipline where the buyer belongs to the same group.

On the China side, exiting the investment is a major change in the outbound investment file and must be closed in due process: change or cancellation registration of the ODI file with the development and reform and commerce authorities that managed the original registration (recording the reduction, transfer or termination of the Vietnam investment); change or cancellation of the ODI foreign-exchange registration at the authorised bank, enabling the sale proceeds to be remitted home through lawful channels and the FX accounts closed; and completion of reporting and tax finalisation duties in China on the transfer income (corporate income tax on the transfer gain, with credit for tax paid in Vietnam within the limits of the double taxation treaty). Skipping the China-side closure leaves a “ghost investment” in the management system, obstructing every later FX and ODI transaction of the group.

Application Analysis

A safe transaction sequence comprises: diligence on transferability before signing (the buyer market access conditions by nationality, the project land status and financial obligations, the necessary approvals); deal structure choosing the project route or the capital route based on the tax and conditions of each; a contract setting the price mechanism, conditions precedent (transfer approval, completion of Vietnamese tax duties) and allocation of transfer tax between the parties; completion of registration changes in Vietnam (investment registration, enterprise registration, land where applicable); and only then money movement and China-side file closure. Reversing the order — receiving money first, paperwork later — is the most common cause of funds being suspended at a bank on one of the two sides.

A strategic valuation point: where the buyer is an unrelated third-country partner, the market-decided transfer price is the most certain tax basis; where the buyer belongs to the same group (an internal restructuring dressed as an exit), Vietnamese tax authorities may re-determine the price under related-party and market price principles, and the Chinese side also examines the transaction substance in ODI management. The enterprise should obtain an independent valuation report for the project before the transaction in both cases — the valuation cost is far smaller than the tax assessment and recovery risk at both ends.

Recommended Actions

Diligence feasibility before negotiating price: the buyer market access conditions by nationality and sector, the project land status and financial obligations, the catalogue of necessary approvals.
Choose the structure (project transfer or capital transfer) on a comparison of tax and conditions of each route; obtain an independent valuation report.
Lock conditions precedent in the contract: investment registration authority approval (where required), completion of transfer tax duties in Vietnam, a clear tax allocation between the parties.
Complete registration changes in Vietnam before moving money; close the ODI and FX files on the China side right after the transaction, leaving no hanging investment.

Frequently Asked Questions

Under what procedures does a Chinese investor transfer a project in Vietnam to a third-country partner?

Under one of two structural routes: transferring the investment project under the Law on Investment 143/2025/QH15 — the transferee must meet the investor conditions for the project and sector, the project must have completed its prescribed obligations, and for projects requiring transfer approval, the investment registration authority approval must be obtained before execution, after which the investment registration certificate is adjusted or issued to the transferee; or transferring capital in the project enterprise — selling the capital contribution or shares to the partner, keeping the legal entity and project intact, with enterprise registration changes and investment registration adjustment. The chosen route depends on land and sector conditions and the tax comparison between the two routes.

How is capital and project transfer tax calculated in an exit-from-Vietnam transaction?

By transaction nature: a direct capital transfer in the project enterprise bears corporate income tax at 20% on the transfer income — the difference between the transfer price and the cost basis plus lawful transfer expenses; where the transferor is a foreign organisation without presence in Vietnam, declaration and payment are effected through the project enterprise or the withholding mechanism under tax administration and contractor tax rules. A share transfer in securities form applies the deemed levy of 0.1% on the transfer price for foreign organisations. Transfer prices between related parties must follow the arm length principle of related-party rules, failing which the tax authority may re-determine them.

What approval and registration procedures are needed on the Chinese side when outbound investment changes?

Three ODI closure procedures: change or cancellation registration of the outbound investment file with the development and reform and commerce authorities that managed the original file (recording the reduction, transfer or termination of the Vietnam investment); change or cancellation of the ODI foreign-exchange registration at the authorised bank, the basis for remitting the transfer proceeds home through lawful channels and closing related accounts; and tax finalisation in China on the transfer income, with credit for tax paid in Vietnam under the double taxation treaty within prescribed limits. Skipping these procedures leaves a hanging investment in China ODI and FX management systems.

How are project transfers with land and business-line conditions handled?

By condition layer: land — a project tied to leased land may be transferred only when land law conditions are met (land financial obligations completed, land use term remaining, land not in dispute, transfer together with assets and the project for the correct purpose); where the project uses annually-paid leased land, the transfer is effected through the project and the assets on the land within the limits of the lessee rights. Sector — the third-country transferee must itself meet the market access conditions applying to foreign investors of its nationality in the project sector (a not-yet-accessible sector cannot be received; a conditionally accessible sector requires proving the conditions before transfer approval).