Quick answer: Gains from securities transfers by an FDI company are subject to CIT — the company determines taxable income as the sale price minus cost basis and eligible transfer expenses, then applies the 20% rate. Transfer losses are deductible against the period’s taxable income. The key difference from individuals: companies are taxed on actual net income, not on a flat percentage of the sale price, so complete cost-basis documentation directly determines the tax due.
Applicable legal bases
The framework below is in force as of 20 October 2026 and directly governs this article:
- Law on Corporate Income Tax 67/2025/QH15 (effective 01/10/2025, applicable from tax year 2025) — securities transfer income is CIT-taxable income; standard 20% rate.
- Law on Securities 54/2019/QH14 — the concept of securities, including shares, bonds, and fund certificates.
- Law on Tax Administration 108/2025/QH15 (effective 01/7/2026) — obligation to declare transfer income in the relevant tax period.
In-depth analysis
Many FDI companies mistakenly treat securities transfers as preferentially taxed “financial income” — in reality, for organizations, this income is consolidated into the period’s general CIT-taxable income at 20% like any other income. The key formula is: taxable income = transfer price − cost basis − eligible transfer expenses. Cost basis is the actual documented purchase price; transfer expenses include brokerage, custody, and fees — all deductible only with valid invoices and documents.
The practical distinction between listed and unlisted shares lies in price verifiability: listed shares have public market prices easy for tax authorities to cross-check, while unlisted share transfers at abnormally low prices relative to book value or independent valuation may attract transfer-pricing scrutiny and reassessment. Unlisted transfers — especially intra-group — should therefore be supported by an independent valuation report.
Four steps to determine tax payable
- Determine the transfer price: the actual contractual sale price with payment evidence; matched market price for listed shares, agreed price for unlisted — an agreed price far below real value is a risk signal.
- Determine cost basis: the original purchase price plus eligible acquisition costs, fully documented; multiple purchase lots use the average method per the registered accounting policy.
- Deduct transfer expenses: brokerage, transaction, and administrative fees — only the invoiced, documented portion.
- Apply the rate and handle losses: net income × 20%; losses offset the period’s CIT-taxable income under the loss-carryforward rules.
Common risks and how to prevent them
- Lost cost-basis documents: unprovable cost basis gives authorities grounds for deemed assessment — keep purchase contracts and payment records from the start.
- Low-price intra-group transfers: selling shares to an affiliate at a nominal price risks market-price reassessment — prepare an independent valuation.
- Confusing individual vs company methods: individuals face a flat tax on the sale price; companies are taxed on net income — applying the wrong method means misfiling.
- Forgetting period declaration: transfer income must be reflected in the period it arises — off-period declaration can trigger administrative tax penalties.
Frequently asked questions
1. We sold listed shares at a gain — how is tax computed?
The FDI company computes net income (sale price minus cost basis and eligible expenses) and applies the 20% CIT rate. The exchange matched price is solid evidence for the sale price.
2. Can transfer losses be deducted?
Yes. Securities transfer losses offset the period’s CIT-taxable income under loss-carryforward rules — but full documentation proving the loss is real is required.
3. Is selling unlisted shares to our parent at a low price a problem?
Very risky. An abnormally low price versus real value may be reassessed at market price with penalties — obtain an independent valuation before the transaction.
4. Does this income enjoy our project’s tax incentives?
Only if the securities transfer income falls within the incentivized project’s scope and meets separate-accounting conditions — most off-project financial investments do not qualify.
Key takeaway for investors
For FDI companies, securities transfer tax is a documentation exercise: keep provable cost basis and eligible expenses and the tax is computed correctly; lose the documents and you lose deductions and face reassessment risk. Low-price related-party deals always need an independent valuation alongside.
This article has been quality-reviewed by the FLAW AI Legal Council This content is legal reference only and does not replace counsel for a specific case.
