Contributing land use rights (LUR) is not selling land — and its tax treatment differs from an ordinary transfer in almost every tax. Misunderstanding this makes many JVs over-provide costs (taxing it as a sale) or under-provide (forgetting the registration fee when title moves to the company). This article systematises the three relevant taxes: value added tax, corporate income tax and the registration fee, under tax guidance current as at October 2026.
1. Value added tax: a capital contribution is not a sale
Under current VAT guidance (Circular No. 219/2013/TT-BTC as amended), contributing assets to establish an enterprise falls in the group not subject to VAT declaration and payment — because in substance the asset moves into the capital of an enterprise co-owned by the contributor, not a sale of goods/services. The documentary consequence: when contributing LUR, the parties use contribution minutes, asset handover minutes and the land change registration file as transaction documents, and issue no VAT invoice for the contributed land value. Distinguish: if the transaction is restructured as an LUR sale (the recipient pays money instead of issuing capital), the whole analysis changes — it becomes a real-estate transfer under the transfer tax regime. The boundary lies in the registered legal substance (contribution into charter capital), not in what the parties call it.
2. Contributor’s corporate income tax: deferred until exit
The most misunderstood point: when a contributed asset is valued above its book residual value at the contributor, the revaluation surplus on assets contributed as capital is not brought into corporate income tax at the contribution date under current CIT guidance (Circular No. 78/2014/TT-BTC as amended). The mechanism is deferral: the surplus is tracked and enters tax determination only when the contributor transfers its capital portion, withdraws capital, or the recipient enterprise dissolves and liquidates assets — when value is actually realised in an external transaction. On the recipient side: the LUR value is recorded as asset cost at the accepted contribution value (for depreciation/allocation under the asset regime) and the recipient records no income from receiving contributed assets. Transition note: the Law on Corporate Income Tax No. 67/2025/QH15 has been effective from 1 October 2025 — parties should check the latest implementing guidance of this law at transaction time, because detailed mechanisms on contribution and capital-transfer income may be re-prescribed in guiding decrees/circulars; the deferral principle above reflects the guidance being applied to asset-contribution transactions.
3. Individual contributors: capital-transfer tax at exit
Where the land contributor is an individual, the same deferral logic applies in personal income tax: contributing LUR to an enterprise does not immediately create real-estate transfer income at contribution; the individual’s tax duty attaches when the individual transfers their capital portion in the enterprise (capital-transfer income) or when the enterprise dissolves and divides assets. The individual and the JV’s tax function must keep the full valuation file from the contribution date, because that value grounds cost and taxable income in an exit transaction years later. Note the personal-income-tax document roadmap in particular: the Law on Personal Income Tax No. 109/2025/QH15 takes effect from 1 July 2026, replacing the PIT Law No. 04/2007 with restructured capital-transfer income rules — exits executed after that milestone must apply the new frame then in force.
4. Registration fee and charges on change registration into the company’s name
Although not a sale, moving LUR from the contributor to the company still requires land change registration, and registration of land use rights falls within the registration-fee scope under Decree No. 10/2022/ND-CP: the payer is the organisation registered with the LUR (the recipient company), and the rate for houses and land is 0.5% computed on the LUR value per the provincial People’s Committee’s land price table at declaration time (not on the agreed contribution value). Decree 10/2022, Article 10, prescribes registration-fee exemption cases — parties should check their specific contribution structure against the current exemption list before budgeting, because exemption status decides a non-trivial sum on a high-value plot. Beyond the registration fee there are dossier appraisal fees and change registration charges per local rules. Finally, distinguish the land use fee on purpose conversion: if the JV, after receiving the land, must convert land use purpose to implement its project, the conversion land use fee is a separate obligation arising from the conversion under Article 121 of the 2024 Land Law — not a tax of the contribution transaction and not offsettable against the above.
Frequently asked questions
Is contributing land to one’s own 100% subsidiary taxed differently from contributing to a JV?
In tax mechanism, no material difference: it remains an asset contribution (no VAT declaration; revaluation surplus deferred until an exit/transfer transaction; registration fee on change registration under the general rules with exemption checking). The difference is governance: contributing to a subsidiary does not change ownership ratios among independent parties, so valuation-dispute risk is far lower, but the valuation file must still be complete for accounting and tax purposes.
Where is the contribution revaluation surplus tracked for later taxation?
In the contributor’s accounting records and the enterprise’s contribution dossier (valuation minutes/certificate, contribution decision, land change registration). At exit, the tax authority reconciles the recorded initial contribution value against the capital transfer price to determine taxable income — an incomplete contribution file is a common reason deductible costs are rejected at exit tax finalisation.
Must the recipient company pay CIT on the value of land received?
No. Receiving contributed assets is a capital transaction, not revenue/income of the recipient: the enterprise records an asset increase and a matching equity increase, recognising no taxable income from the contributed assets. The recipient’s tax duty arises only when it later transfers that very plot (real-estate transfer income) or depreciates/allocates the asset under the regime.
Do the above taxes arise for annual-payment leased land contributions?
The question sits at the wrong layer: annual-payment leased land may not, in principle, be contributed by the LUR itself under Article 34 of the 2024 Land Law, so no LUR contribution transaction exists to tax. If the substitute structure is contributing assets attached to that land (the factory), the tax analysis applies to the corresponding contributed asset — still under the no-VAT-declaration on contribution and revaluation-deferral mechanism described in this article.
This article has been quality-reviewed by the FLAW AI Legal Council