A helpful starting point to identify where tax obligations fall after a transfer With the increasing number of mergers and acquisitions (M&A), transfer of contributed capital and securities is becoming more common and is widely used by both domestic and foreign investors. Complying with the regulations and having a tax efficient approach is one of the key concerns of most shareholders who would like to invest or divest from a Vietnamese company. In general, share transfer in Vietnam includes the sale of capital contributed in a limited liability company (LLC) and securities of a joint stock company (JSC), and in certain circumstances, the taxes imposed on each transaction are different. Tax liability of the sellers Corporate sellers/transferors For local corporate sellers, any gain derived from the transfer of capital/securities in another Vietnamese entity is regarded as ‘other income’ and is accordingly subject to corporate income tax (CIT) at the current standard rate of 20 per cent. The tax treatment on capital gains earned by a foreign seller is different depending on the corporate form of the target. In particular, the transfer of contributed capital in a Vietnamese LLC is subject to CIT at 20 per cent on the gain, whereas… Read full this story
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