On August 30th, 2024, the General Department of Taxation issued Official Letter No. 3872/TCT-CS, accordingly:
In the case two companies carry out the procedures for the corporate merger, if the merger is conducted according to regulations of law, the following applies:
– Regarding value added tax (VAT): When transferring assets to merge into another enterprise according to regulations of the Enterprise Law, the enterprise with transferred assets must have an asset transfer order, accompanied by the asset’s origin documents and is not required to declare, calculate and pay VAT, and is not required to issue VAT invoices.
– Regarding corporate income tax (CIT):
The difference due to revaluation of assets (if any) according to the regulations of law when transferring merged assets is implemented according to regulations at Point m, Clause 2, Article 3 of Decree No. 218/2013/ND-CP dated December 26th, 2013 of the Government (amended and supplemented by Clause 1, Article 1 of Decree 91/2014/ND-CP dated October 1st, 2014) and Clause 14, Article 7 of Circular No. 78/2014/TT-BTC dated June 18th, 2014 (amended and supplemented by Article 2 of Circular No.151/2014/TT-BTC dated October 10th, 2014).The increase in the difference between the amount paid by the owner to acquire 100% of the company’s capital compared to the company’s asset value after revaluation is included once in other income in the tax period when determining taxable income for CIT.
The company is allowed to depreciate or allocate to deductible expenses when determining annual taxable income for CIT for assets at the revalued price (except for cases where the value of land use rights is not depreciated or allocated to expenses according to regulations).
– Asset revaluation: Implement according to regulations of Article 4 of Circular 45/2013/TT-BTC of the Ministry of Finance guiding the management, use and depreciation of fixed assets.
