Scenario: after 12 years of operation, the group decides to sell its factory to another investor: the deal value covers a lump-sum land lease right with 33 years left and the factory buildings on the land. Finance asks: what is the corporate income tax computed on, at what rate, and how is the cost basis determined? Real-estate transfers are among the transactions tax authorities review most closely. This article sets out the current framework under the Law on Corporate Income Tax 67/2025/QH15.
Separate determination and the 20% rate
The Law on Corporate Income Tax 67/2025/QH15 (effective 1 October 2025, applying from the 2025 tax period) with Decree 320/2025/ND-CP and Circular 20/2026/TT-BTC forms the current framework for real-estate transfer income. Three base principles: one, income from real-estate transfers — including transfers of land use rights, land lease rights and assets attached to land — must be accounted and declared separately, not offset against other production-business results in the same period (the point investors most often get wrong when hoping to absorb transfer gains with production losses); two, the applicable rate is the standard 20%; three, taxable income is transfer revenue less cost basis and valid transfer expenses. On sources, note a recent change: the corporate income tax content of Circular 103/2014/TT-BTC ended for CIT purposes from 12 March 2026 — every reference to the real-estate transfer mechanism under Circular 103/2014 in older documents must be updated to the 67/2025, 320/2025 and 20/2026 framework.
Cost basis: the heart of the tax computation
For a lump-sum land lease right, the cost basis is the right’s residual value at transfer: total rent paid for the whole term, allocated straight-line over the years, less the portion allocated to elapsed use. For factory buildings and works transferred together, the cost basis is the residual book value after depreciation at the sale date. Additional deductible costs are the transaction’s direct expenses: valuation, lawful brokerage, notarisation, registration fees, legal advisory — and the transaction’s levies. Three risks get cost basis rejected: original land-rent vouchers lost over the years (especially where the project changed owners and accounting systems repeatedly); factory construction costs lacking acceptance and finalisation records, so book residual values are not accepted; and a declared transfer price abnormally below the area’s market land price — the tax authority re-determines revenue at market under the Law on Tax Administration 108/2025/QH15, and the difference becomes taxable income plus late-payment interest. Cost-basis governance starts in the project’s first year with land-file archiving discipline, not on the day the sale is decided.
Recognition timing, filing and deal structure
Transfer income is recognised and declared following the transaction’s actual progress: for real-estate transfers, the filing duty arises on completion as prescribed (and where money is collected in stages, the provisional-payment mechanics under Decree 320/2025/ND-CP and Circular 20/2026/TT-BTC must be confirmed by the tax function for each specific structure). Structurally, the investor has three choices with entirely different tax consequences: selling the assets (lease right + factory) — real-estate transfer tax arises at the selling entity; selling shares/capital in the project company — capital transfer income, the property stays inside the entity, no direct real-estate transfer tax arises but the buyer inherits the entity’s whole tax history and risks; and transferring the investment project under the Law on Investment 143/2025/QH15 — combining investment procedure with tax consequences matching the transferred assets’ nature. The structure choice must be tax-modelled before the term sheet is signed — once price and structure are fixed, tax optimisation room is nearly gone.
Frequently Asked Questions
How much corporate income tax applies to transferring leased land use rights and a factory?
The standard 20% CIT rate applies to real-estate transfer income under the Law on Corporate Income Tax 67/2025/QH15 and Decree 320/2025/ND-CP. The core technical point: income from real-estate transfers must be determined separately for declaration and payment, not pooled with ordinary production-business income in the same tax period. Taxable income = transfer revenue − the cost basis of the land use rights/assets − valid expenses directly related to the transfer. This mechanism previously sat in Circular 103/2014/TT-BTC (its CIT part) — that part was repealed from 12 March 2026 under point b.11, clause 1, Article 13 of the repealing instrument, and the direct framework is now Law 67/2025, Decree 320/2025 and Circular 20/2026/TT-BTC.
How is the cost basis computed when transferring a lump-sum-paid land lease right?
The cost basis of the lease right is its residual value at transfer: take the total lump-sum rent paid for the whole lease term, allocate it over time, and deduct the portion corresponding to the elapsed period — the remainder is the deductible cost basis. Add to it the construction cost of factory buildings and works on the land (at residual value after depreciation) where assets transfer together, and direct transfer expenses (valuation, notarisation, registration fees, advisory). The enterprise must keep the original documents for rent paid many years earlier — lost documents mean lost cost basis, and tax falls on nearly the whole revenue. That is why land files and land-rent payment vouchers are accounting assets to be archived for the project’s entire life.
Must the buyer withhold tax when paying a foreign seller?
Yes, where the seller is a foreign organisation without a permanent establishment in Vietnam: the seller’s Vietnam-source income from the transaction falls under the foreign contractor tax regime, and the Vietnamese buyer as payer must withhold, declare and remit the tax before paying abroad, under the contractor-tax mechanism in Circular 103/2014/TT-BTC (whose contractor-tax part remains in application; its corporate income tax part was repealed from 12 March 2026 at point b.11, clause 1, Article 13 of the repealing instrument, and Vietnamese enterprises apply the Law on Corporate Income Tax 67/2025/QH15, Decree 320/2025/ND-CP and Circular 20/2026/TT-BTC to their own income). The contract consequences are very practical: the price must state whether it is gross or net of the withheld tax, the withholding rate and basis must be confirmed with the managing tax authority before the payment date, and the buyer keeps the remittance receipts so the seller is not taxed twice. Ignoring the withholding duty makes the buyer — not the departed seller — the party the tax authority collects from and penalises.
If a real-estate transfer makes a loss, can it be offset against other business income?
Under the current framework, yes — this is a notable change in the Law on Corporate Income Tax 67/2025/QH15. Clause 3, Article 7 of the Law and Article 6 of Decree 320/2025/ND-CP allow an enterprise to offset losses from production and business activities (including losses from real-estate transfers and investment project transfers) against taxable income of income-earning activities of its choice within the same tax period. Two exceptions to remember: a real-estate transfer loss may not be offset against income of an activity enjoying tax incentives; and income from transfers of mineral exploration/exploitation investment projects and related rights must be determined separately with no offsetting, under clause 4, Article 7. Distinguish this from the gain direction: real-estate transfer income must still be determined separately for declaration — the offset mechanism applies to the loss direction and does not remove the transaction’s separate accounting duty.
