Direct Share Transfers in Vietnam: Capital Gains Tax Rules

Vietnam generally taxes direct transfers of shares and capital contributions in Vietnamese companies by foreign investors. The applicable tax treatment depends on the seller’s status, the type of equity being transferred, and whether a statutory exception applies. Completing the transaction also requires compliance with Vietnam’s tax filing obligations and, where applicable, coordination with corporate and investment registration procedures.

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These requirements influence transaction timing, closing conditions, and the allocation of responsibilities between the parties.

When does Vietnam have taxing rights over a direct share transfer?

Vietnam’s taxing rights do not depend on where the Share Purchase Agreement is signed or where the purchase price is paid. Instead, the determining factor is whether the transaction transfers a direct ownership interest in a Vietnamese enterprise. Establishing this at the outset determines whether Vietnam’s domestic tax rules apply and forms the basis for the transaction’s wider compliance requirements.

The legal form of the target company is the next decision point because it determines how the transfer is completed under Vietnamese law. Transfers involving joint stock companies (JSCs) and limited liability companies (LLCs) follow different corporate procedures under the Enterprise Law, affecting the approvals, corporate records, and registration updates required before ownership can be recognized. Identifying the target company’s legal structure early allows the parties to plan the transaction timetable and regulatory workstreams more effectively.

The same principle applies to foreign-invested enterprises (FIEs). A direct transfer involving an FIE may remain subject to Vietnam’s tax rules even where both the buyer and seller are overseas entities. For example, if a Singapore holding company sells its entire ownership interest in a Vietnamese LLC to a Japanese investor, Vietnam may still tax the transaction because the ownership of the Vietnamese company changes directly, notwithstanding that the agreement is executed and settled outside Vietnam. 

Direct transfers should also be distinguished from indirect offshore transfers because they are subject to different legal and tax analyses. Investors should confirm which structure is being used before negotiating transaction documents, as applying the wrong framework may affect both the tax analysis and the execution strategy. This article focuses solely on direct transfers of shares or capital contributions in Vietnamese enterprises.

How Vietnam calculates tax on direct share transfers

Once a transaction falls within Vietnam’s direct transfer regime, the next question is how Vietnam calculates the tax liability. The answer depends on both the seller’s status and the type of equity being transferred. Foreign corporate sellers and foreign individual sellers are not always taxed under the same methodology, making this one of the first issues that should be confirmed during transaction planning.

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Following the implementation of Decree 320/2025/ND-CP on December 15, 2025, Vietnam introduced a revised framework for taxing many capital transfers undertaken by foreign corporate sellers. The current rules distinguish between different categories of equity and should therefore be assessed before the commercial terms of the transaction are finalized.

For many direct transfers undertaken by foreign corporate sellers, the agreed transaction value now has a more immediate tax consequence than under the previous framework. Consider a foreign corporate seller disposing of its entire interest in a Vietnamese LLC for US$12 million. Where the transaction falls within the current deemed-tax regime, the Vietnamese corporate income tax may be calculated on the US$12 million sale proceeds, making the agreed consideration a key driver of the seller’s overall tax cost.

The transaction documents should also support the commercial substance of the transfer. The Share Purchase Agreement, valuation analysis, corporate approvals, payment records, and evidence supporting the transfer consideration should present a consistent commercial position. Where the declared consideration cannot be substantiated or differs from the commercial substance of the transaction, the Vietnamese tax authorities may subject the transfer to closer review.

Investors should also determine at an early stage whether any statutory exceptions apply. Certain qualifying internal group restructurings, for example, may receive different tax treatment where the conditions prescribed under Vietnamese law are satisfied. 

Who bears the compliance obligations during the transfer?

Determining the tax payable does not complete the transaction. Vietnam’s filing and payment requirements should be incorporated into the transaction timetable alongside the commercial negotiations because failure to satisfy them can delay ownership transfers even after the parties have agreed on valuation and executed the Share Purchase Agreement.

Although the foreign seller generally bears the underlying tax liability, the parties should determine before signing the Share Purchase Agreement who will prepare and submit the tax declaration, how the tax will be funded, whether satisfaction of Vietnam’s tax obligations will be a condition precedent to completion, and how any post-closing tax adjustments will be allocated. 

Can a double tax agreement reduce Vietnam’s tax liability?

Vietnam has concluded an extensive network of double tax agreements (DTAs), but foreign sellers should not assume that residence in a treaty jurisdiction automatically overrides Vietnam’s domestic tax rules. Whether a DTA modifies Vietnam’s taxing rights depends on the wording of the relevant treaty, the nature of the equity being transferred, and the allocation of taxing rights between Vietnam and the seller’s jurisdiction.

A Singapore company selling its Vietnamese subsidiary to a Japanese buyer for US$25 million may find that the applicable Vietnam–Singapore Double Tax Agreement produces a different tax outcome from Vietnam’s domestic rules. That difference can directly affect the seller’s net proceeds and, consequently, the commercial negotiations over the purchase price and allocation of tax liabilities between the parties.

Foreign sellers seeking to rely on treaty relief should ensure that the Vietnamese tax filing is supported by the documentation required under both the applicable DTA and Vietnam’s tax administration rules. In practice, this commonly includes a valid certificate of tax residence issued by the seller’s home jurisdiction together with supporting documentation demonstrating eligibility for treaty benefits. 

Sequencing tax compliance and ownership registration in Vietnam

Once Vietnam’s tax obligations have been satisfied, the parties can proceed with the corporate registration steps required to recognise the ownership change under Vietnamese law. Depending on the transaction, this may include updating the company’s shareholder or member records and, where required, amending the Enterprise Registration Certificate (ERC). Where the target is a foreign-invested enterprise, the parties should also determine whether amendments to the Investment Registration Certificate (IRC) are required, particularly where investor information or other registered investment details change.

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Regulated industries introduce an additional execution variable. Businesses operating in sectors subject to foreign ownership limits or market access conditions may require further regulatory approvals before ownership can be recognized. 

Although these procedures are administered by different authorities, they should be managed as a single transaction workstream. 

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For assistance with direct share transfers in Vietnam, foreign investors can contact Dezan Shira & Associates for professional advisory services and support.

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