Vietnam introduces new law on corporate income tax

27 August 2025

On 14 June 2025, Vietnam’s National Assembly adopted amendments to the Law on Corporate Income Tax (“CIT Law”), including a landmark change introducing capital gains taxation rules for non-resident corporate shareholders. The amendments take effect from 1 October 2025.

On 9 July 2025, the Vietnam Ministry of Finance issued a draft decree providing further information on the implementation of certain provisions of the CIT Law (“Draft Decree”).

This article summarises the key developments under this new legislative framework.

Introduction of rules capital gains tax obligations

Historically, the application of corporate income tax (“CIT”) on capital gains derived by foreign investors in Vietnam was often ambiguous, particularly for offshore indirect transfers where the underlying Vietnam assets were transferred without a direct presence in the country. While certain direct transfers, such as shares in publicly listed joint stock companies, had clearer rules (and were already subject to a 0.1% tax on gross proceeds), it was not entirely clear whether non-resident entities without a permanent establishment (“PE”) in Vietnam could generally conduct offshore indirect transfers without definitively triggering significant CIT obligations.

This changes from 1 October 2025. The new amendments explicitly clarify the taxability of capital gains derived by foreign corporate shareholders, regardless of:

• whether the transfer occurs directly or indirectly, explicitly bringing offshore indirect transfers (where the underlying assets are Vietnamese) within the tax net; and/or
• whether the investor maintains a PE in Vietnam.

Specifically, capital gains tax (“CGT”) will apply to:

• foreign corporate investors, that is, non-resident entities;
• transfers of capital in both listed and non-listed Vietnamese companies, as well as capital contributions in limited liability companies; and
• direct and indirect transfers, including those executed offshore but involving Vietnam assets.

The current 0.1% tax on gross proceeds from transfers of shares in publicly listed companies is unchanged and continues to apply.

Key compliance obligations

The new regime also introduces specific reporting and tax remittance obligations as summarised below.

Tax base and rate

For non-resident sellers of non-listed companies and limited liability companies, in cases such as capital transfers (including indirect share transfers) and certain asset transfers, the amendments replace a “net gains” approach with taxation based on gross proceeds from the transfer, irrespective of acquisition cost or whether the seller incurs a loss. The Draft Decree proposes a flat 2% tax on gross proceeds for such capital transfers where the non-resident seller does not directly manage or control the Vietnamese target’s operations, and for certain asset transfers. Where the seller does have such operational control, the transfer would remain subject to the applicable corporate income tax rules under existing provisions.

Tax declaration and payment

 The responsibility for declaring and paying CGT falls on the Vietnamese target company or the acquiring party, depending on the transaction structure. In cases where both transferor and transferee are offshore, the Vietnamese target company is required to act as the withholding agent.

Filing timelines

Relevant parties must file the tax declaration within 10 working days of the date the capital transfer agreement is signed or the transfer is completed, whichever is earlier. The Draft Decree reiterates this timeframe and requires the submission of valuation documentation and transaction agreements in Vietnamese or translated form.

Valuation and documentation

Tax is generally computed on gross proceeds for covered transfers; listed shares are also taxed on a gross-proceeds basis, at the 0.1% rate. Parties must maintain sufficient transaction documentation. Transfer pricing rules may also apply where related-party transactions are involved.

Grandfathering and unaffected incentives

While the new CGT rules will apply from 1 October 2025, tax incentives available to qualifying projects (e.g. in industrial parks or economic zones) generally remain unaffected and continue to apply to income that qualifies for exemption or preferential treatment under other CIT rules.

Broader PE obligations

The amended CIT Law also expands the definition of PE to explicitly include foreign enterprises that provide goods or services through e‑commerce or digital platforms used by Vietnamese customers, regardless of whether they maintain a physical presence in Vietnam. As a result, such enterprises may now be treated as having a PE and be subject to CIT on income attributable to their digital activities in Vietnam, unless an applicable double taxation agreement provides otherwise.

The Government has issued Decree No. 117/2025/ND‑CP to provide procedural guidance, including requiring platform operators to register with the Vietnamese tax authorities, withhold value-added tax and personal income tax on transactions conducted by Vietnamese individuals through their platforms, and submit monthly tax reports.

Looking ahead

Further guidance is expected in the form of circulars, which may clarify the applicable deemed CIT rate, valuation/allocation methods, exemptions (if any), reporting procedures, and compliance requirements. Once the Draft Decree, or any amended version, is passed, it should materially clarify the position of non-resident sellers and simplify a key M&A issue by:

• confirming a gross-proceeds basis in lieu of a net-gains calculation; and
• if the proposed 2% rate is adopted, delivering outcomes that in many cases may be more favourable to sellers than applying 20% CIT to net gains.

That said, ambiguity remains as to what constitutes “direct management/control” of the target company’s operations, and the Draft Decree does not resolve practical challenges in taxing offshore transactions (e.g. where an offshore company holds both Vietnamese and non-Vietnamese assets), which will still require a reasonable method to attribute gross proceeds to Vietnam and appropriate supporting documentation.