Capital Transfer Tax Rules Under Decree 320

Vietnam has updated its tax framework to strengthen oversight of capital transfer taxation under Decree 320, introducing a 2 percent deemed corporate income tax (CIT) on most proceeds from foreign enterprises while carving out specific exemptions.

Decree No. 320/2025/ND-CP, issued on December 15, 2025, and implemented through Circular 20/2026/TT-BTC on March 12, 2026, sets the new standards for these transactions. The Ministry of Finance defined that taxable revenue is recognized when the initial capital transfer agreement takes legal effect. However, the term “initial capital transfer agreement” is not clearly defined, which could lead to different interpretations regarding amendments or restatements.

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Under the new regime, foreign enterprises without a permanent establishment in Vietnam, or those where income is not attributable to a PE, must pay deemed CIT at a 2 percent rate on capital transfer proceeds. The rules also cover foreign enterprises operating through e-commerce or digital platforms. If a transfer value exceeds VND 5 million but lacks valid non-cash payment documentation, the tax authority may reassess the transaction and determine the transfer price for CIT purposes.

Qualifying for Intra-Group Exemptions

Not all transactions trigger this tax. Circular 20 clarifies that qualifying intra-group ownership restructuring is exempt from deemed CIT. The exemption applies to demergers, capital contributions using shares, and stock dividends within the same corporate group. To qualify, the ultimate beneficial owner must remain unchanged, the transfer value cannot exceed book value or original investment, and the transferee must assume all associated rights and obligations. If these conditions are met, the transaction does not generate taxable income.

Practically speaking, these exclusions mean that if a parent company simply shifts assets between its subsidiaries without a change in ownership at the top level or a realization of profit, the company avoids the 2 percent levy. This creates a clear distinction for multinationals looking to reorganize their regional structures, as they can move capital between entities without triggering a specific tax event, provided the internal bookkeeping reflects the transfer at cost or book value rather than a premium.

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Filing Requirements and Deadlines

Businesses must file CIT returns using the new Form 05/TNDN from Circular 21/2026/TT-BTC. These returns must be submitted within 10 calendar days of the tax obligation arising. For agreements signed before Decree 320 took effect, companies must continue using Form 05/TNDN issued under Circular 80/2021/TT-BTC. This transitional rule ensures that ongoing transactions are not disrupted by the regulatory update.

Companies undertaking capital transfers should review their transaction structures to determine if they fall under the deemed tax regime or qualify for an exclusion. Maintaining full supporting documentation is essential, particularly for indirect transfers where the allocation of proceeds must be substantiated for Vietnamese reporting purposes. Proactive compliance helps mitigate tax risks under the updated framework.