On June 10th 2019, Hanoi Tax Department issued Official Letter No. 44290/CT-TTHT. Whereby:
In case the Company is a legally established entity under foreign laws that has signed the Capital Transfer Agreement for the owned capital in the target company (the legal entity which is duly established under foreign laws) which currently invested in a company established under the laws of Vietnam for the third company (the legal entity established legally under foreign laws). In principle, the capital transferor must pay CIT in Vietnam for the income received due to originating from Vietnam from capital transfer activities. It will be regardless the location of conducting business according to the provisions of Clause 1, Article 1 of Decree No. 12/2015 / ND-CP and Item c, Clause 2, Article 14 of the Circular No. 78/2014/TT- BTC.
The payable CIT amount is calculated based on Turnover, Cost of sales and other expenses of capital transfer activities in accordance with the law on CIT.
In case the transferor and assignee in the capital transfer activities are foreign organizations that do not operate under the Investment Law and the Enterprise Law, the Vietnamese Company which is invested by the foreign organization has the responsibility to declare and pay CIT from capital transfer activities of the foreign organizations.
