Tax policy for capital transfer

Tax policy for capital transfer

Tax policy for capital transfer
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On October 05, 2020, Binh Duong Provincial Tax Department issued Official Letter No. 22620/CT-TTHT guiding tax policy for capital transfer as follows: 

Based on Double taxation avoidance agreement, Circular 205/2013 / TT-BTC dated 24/12/2013, Circular 219/2013 / TT-BTC dated 31/12/2013, Circular 78/2014 / TT-BTC dated 18/6/2014, Circular 96/2015 / TT-BTC dated 22/6/2015 and Circular 151/2014 / TT-BTC dated 10/10/2014, in case Company A is operating in South Korea (the foreign contractor - the transferor) signs the capital transfer contract in Company B (the company is in Vietnam) to Company C (the transferee), the declaration and payment of VAT and CIT from the capital transfer of Company B are made as follows:

1. Subject to tax on the income from capital transfer: Company A 

2. Responsibility for tax declaration and payment: Company B must register, declare and pay taxes on behalf of Company A. 

3. Determination of payable VAT and CIT amount: 

  • VAT: Capital transfer is not subject to VAT. 
  • CIT: The Company shall determine the payable CIT of Company A under the guidance in Clause 1 Article 11 Chapter II and Item a Clause 2 Article 14 Chapter IV of Circular No. 78/2014 / TT-BTC, Article 8 Circular No. 96/2015 / TT-BTC dated 22/06/2015 of the Ministry of Finance.