The transfer of capital contributions or shares in Vietnam is not merely a civil transaction; it is a complex legal process fraught with tax risks if not executed correctly. Many enterprises, especially FDI firms and startups, often find their transactions "stalled" or face unexpected tax liabilities due to errors in documentation preparation or a misunderstanding of the current 2026 regulations.
Does your business have a plan to optimize tax obligations when transferring capital? Who will review the commitments in your contracts to ensure maximum benefit for investors when you lack a dedicated legal department? What hidden risks might arise if the procedures for notifying changes in enterprise registration do not align with tax reports? The following article deciphers the entire legal process and tax obligations for capital transfers, while introducing an "Outsourced Legal Department" as a shield to protect your business amidst the continuously changing Vietnamese legal landscape.
Legal framework and conditions for capital and share transfers
The transfer of capital contributions (for LLCs) and shares (for joint-stock companies) is strictly governed by the Law on Enterprises 2020 and its 2025 amendments Law on Enterprises 2020 (Luật Doanh nghiệp 2020)[cite: 5]. For foreign investors, this transaction is also subject to the Law on Investment 2025 regarding market access conditions Law on Investment 2025 (Luật Đầu tư 2025)[cite: 3].
When executing a transfer, enterprises must strictly adhere to the procedure for notifying changes in enterprise registration. Specifically, within 10 days from the change, the enterprise must register the change of members or notify the change of shareholders Decree 168/2025/NĐ-CP (Nghị định 168/2025/NĐ-CP)[cite: 4]; Law on Enterprises 2020 (Luật Doanh nghiệp 2020)[cite: 5].
Procedures and sequence for tax declaration and payment
Taxation is the most controversial and risky issue in capital transfer transactions.
Regarding Personal Income Tax (PIT)
Personal income from capital transfers is determined based on the difference between the transfer price and the purchase price, plus related expenses Law on Personal Income Tax 2025 (Luật Thuế thu nhập cá nhân 2025)[cite: 2]. In cases where the purchase price and reasonable expenses cannot be determined, PIT is calculated as 2% of the transfer price Law on Personal Income Tax 2025 (Luật Thuế thu nhập cá nhân 2025)[cite: 2].
Regarding Corporate Income Tax (CIT)
Enterprises with income from capital transfers must declare and pay CIT in accordance with Decree 320/2025/NĐ-CP Decree 320/2025/NĐ-CP (Nghị định 320/2025/NĐ-CP)[cite: 1]. Income from capital transfers is classified as other income and must be declared in taxable income when calculating CIT Decree 320/2025/NĐ-CP (Nghị định 320/2025/NĐ-CP)[cite: 1].
| Subject | Tax Calculation | Tax Rate |
|---|---|---|
| Individuals (with cost basis) | Taxable Income | 20% |
| Individuals (no cost basis) | Transfer Price | 2% |
| Enterprises | Taxable Income | 20% Decree 320/2025/NĐ-CP (Nghị định 320/2025/NĐ-CP)[cite: 1] |
Common risks and errors in practice
From DEDICA’s advisory experience, we note many businesses face risks due to subjective errors:
- Documentation discrepancies: Information in tax reports does not match enterprise registration documents at the Department of Planning and Investment, leading to tax arrears or administrative penalties.
- Lack of non-cash payment vouchers: For capital transfer transactions valued at 5 million VND or more, if there is no non-cash payment voucher, the tax authority has the right to assess the transfer price Decree 320/2025/NĐ-CP (Nghị định 320/2025/NĐ-CP)[cite: 1].
- Missing procedures for foreign investors: Many businesses forget to complete capital contribution/share purchase registration procedures under the Law on Investment, rendering the transaction legally invalid Law on Investment 2025 (Luật Đầu tư 2025)[cite: 3]; Decree 168/2025/NĐ-CP (Nghị định 168/2025/NĐ-CP)[cite: 4].
The role of DEDICA in regular legal management
Maintaining an in-depth internal legal department is a significant financial burden for many businesses. DEDICA’s outsourced legal department provides an effective alternative:
- Rapid response: We review transfer contracts and optimize transaction structures to minimize tax risks right from the drafting stage.
- Comprehensive legal control: DEDICA accompanies your business in daily operations, ensuring all capital change procedures are promptly notified to management authorities.
- Cost optimization: The fixed cost of an in-house lawyer is often much higher than regular legal advisory services, yet lacks the versatility needed when businesses face complex tax, labor, or M&A issues.
Conclusion
Capital and share transfers are financial transactions that significantly impact the legal structure and obligations of an enterprise. To succeed, businesses must follow these steps: (1) Review market access conditions; (2) Sign tight transfer contracts; (3) Register changes at the Department of Planning & Investment; and (4) Complete all tax obligations. Common mistakes like dishonest declarations or missing non-cash payment vouchers can lead to risks of registration reversal Decree 168/2025/NĐ-CP (Nghị định 168/2025/NĐ-CP)[cite: 4]. Build a solid legal foundation from the start to protect your business value.
Each capital transfer transaction has specific nuances regarding investor nationality and asset type. Attempting procedures without professional advice can lead to prolonged and difficult-to-resolve legal consequences. Contact DEDICA Law Firm now to have our team of lawyers review your documentation and advise on the most optimal transfer strategy. We provide consulting support in both English and Chinese for international partners.
The content of this article is for reference based on legal regulations at the time of drafting. Each case has specific circumstances; please consult DEDICA lawyers for accurate advice tailored to your business.
