Corporate restructuring before IPO: accounting and tax perspectives

Vietnam’s stock market is entering a new growth cycle with multiple records being set, accompanied by a wave of large enterprises across various sectors announcing or quietly planning their initial public offerings (IPOs) for the 2026-2027 period. However, an IPO is not merely a fund-raising event; it is in fact a comprehensive test of a company’s financial, accounting and tax health.

In brief

• Tax risks and capital history can directly impact valuation, timeline and IPO feasibility. 
• New regulations effective from 2025 require companies to demonstrate transparency in charter capital, not only at present but also historically for up to 10 years. 
• Early preparation in tax due diligence and capital audit can make a significant difference for IPO-bound companies.

In the lifecycle of a business, an IPO is not only a financial milestone but also a benchmark of governance capability and transparency. Before going public, however, many companies must undergo restructuring – a complex yet essential process to achieve optimal valuation and attract strategic investors. 

Most Vietnamese private enterprises have evolved over multiple periods and generations. Due to various factors, owners often establish separate entities to operate and hold assets individually. At the IPO stage, such a structure may be suboptimal in terms of scale, transparency, and synergy. Consolidation or merger into a unified corporate group enables companies to reach sufficient scale, build a supportive ecosystem, improve resource utilization and enhance investor appeal. 

Based on professional experience, successful IPO companies typically undergo comprehensive internal restructuring across legal, tax, governance and accounting dimensions. This article highlights common challenges in accounting and tax compliance during ownership restructuring for IPO preparation. 

Tax: hidden risks directly affecting IPO transactions 

Unlike some countries, Vietnam currently does not provide tax exemptions for enterprises undertaking internal ownership restructuring transactions. This raises significant concerns for business owners. Will business owners and their companies incur tax expenses when reorganizing ownership structures within their corporate groups, even though the owners remain the ultimate beneficial owners before and after restructuring? 

These concerns are entirely valid because tax is a real financial cost. Depending on the scale of transactions, the tax amount can be substantial, especially given Vietnam’s current tax framework, which applies a 20% corporate income tax (CIT) and personal income tax (PIT) on income from capital transfers of Vietnamese companies and owners of private or limited liability companies. A draft amendment to PIT regulations is also under consideration, potentially removing the 0.1% rate for share transfer transactions in non-public joint stock companies. 

Understanding and assessing tax impacts throughout – from strategic restructuring planning to the design and development of the target ownership structure – is key to improving tax efficiency. However, this is often overlooked because restructuring needs to be executed quickly to capture market opportunities. Consequently, tax implications of past transactions may be ignored and, in many cases, may result in future tax costs borne by the target structure. 

For example, internal transactions such as advances, receivables, payables and loans between the target company and its shareholders or related parties may be subject to imputed CIT and PIT liabilities. Certain interest expenses or procurement costs temporarily recorded in construction-in-progress accounts may not be recognized as deductible project costs in the future. 

Tax due diligence is a fundamental requirement and an international best practice when investors decide on pricing and legal protections related to tax compliance in M&A transactions. Ignoring the review of past tax implications and failing to establish remediation plans can reduce a company’s competitiveness and bargaining power in such transactions. 

From a governance perspective, reviewing historical tax compliance is a preparatory step that helps consolidate and standardize tax and financial records. In practice, the availability and quality of information are critical for owners to make strategic decisions regarding restructuring. 

The design and implementation of the target structure are always accompanied by the expectation of tax optimization. This process typically requires close coordination between legal, financial and tax advisors to assess restructuring options, quantify tax costs and prepare documentation to ensure compliance. In practice, depending on the nature of each restructuring transaction, improved tax outcomes can be achieved in compliance with regulations through mechanisms such as demergers, mergers or share swaps. Furthermore, certain structures may create synergies by efficiently managing cash flows for restructuring transactions while simultaneously addressing historical transactions to mitigate potential tax risks identified during due diligence. 

Based on our experience in numerous legal ownership restructuring projects, the involvement of tax advisors enables business owners to gain a comprehensive view of tax implications, help with compliance and develop necessary tax planning strategies for both the enterprise and its shareholders. During restructuring, enterprises should consider post-restructuring ownership models that not only meet business objectives but also improve tax outcomes for founders and owners, consistent with their future ownership strategies. This often involves decisions regarding ownership structures and ratios (e.g., corporate vs. individual shareholders) as well as the choice of legal entity type (e.g., joint stock company versus limited liability company), given that tax policies differ for capital income and transfers between individuals and organizations. 

Another important consideration is the transparency and sustainability of the ownership structure from a tax compliance perspective. IPO companies must comply with numerous financial reporting and tax regulations. Information regarding transactions with shareholders and related parties must be fully and transparently disclosed. Accordingly, economic transactions within related parties and affiliated entities in the target ownership model must be carefully planned to comply with transfer pricing principles while reducing tax-related financial leakage. 

Audit of capital contribution from owners: a potential hurdle on the path to IPO 

A critical yet often underestimated challenge in IPO preparation is the requirement to review and audit the history of capital contribution from owners over an extended period. Under Circular 19/2025/TT-BTC issued by the Ministry of Finance and effective from May 2025, IPO registration dossiers are required to include a report on capital contribution from owners, which must be audited by an independent audit firm. Notably, the capital contribution from owners' report must cover a period of 10 years up to the IPO registration date. For companies that have been operating for less than 10 years, the audit period commences from the date of establishment. 

During the IPO process, regulators, auditors and investors are not only concerned with the capital at the time of offering but also require companies to demonstrate the legality, transparency and consistency of the entire history of capital contributions, increases or decreases in capital, uses of proceeds, capital transfers, share issuances and dividends/profit distributions to shareholders. This is particularly important for many Vietnamese private companies, where capital contribution history often involves cash transactions, asset valuations, or internal advance arrangements that may not have been fully standardized from legal, accounting, or tax documentation. 

In practice, many companies only begin reviewing capital-related matters during the final stage of IPO preparation. This often results in the need for urgent remediation of issues such as: missing or incomplete documentation evidencing initial capital contributions and subsequent capital increases; capital contributions made later than the timeline registered with the business registration authority but not appropriately addressed from accounting and legal perspectives; unclear use of proceeds or insufficient supporting documents to evidence that capital was used for its intended purposes; related-party capital transfer transactions that do not properly reflect transaction value or for which tax obligations have not been fully completed; and inconsistencies between legal documents, accounting records, and audited financial statements across years. 

From an audit perspective, these issues may directly affect the auditor’s ability to issue an unmodified audit opinion. In certain cases, they may require retrospective adjustments or even a reassessment of the target capital structure before IPO, potentially including a change in the IPO entity. From a capital market perspective, financial investors and strategic investors place significant importance on the robustness, transparency and auditability of a company’s capital history, viewing it as an important indicator of corporate governance quality and potential risk exposure. 

Therefore, companies planning for IPO should proactively review their capital history at an early stage, in parallel with ownership restructuring and tax reviews. This proactive approach allows companies to identify and address legal, accounting and tax issues related to capital before entering the IPO audit phase; prepare sufficient documentation, evidence, and supporting rationale for discussions with auditors and regulators; and reduce the risk of material adjustments at sensitive stages, thereby protecting the IPO timeline and transaction valuation. 

In addition to the audit of capital contributions from owners, during corporate restructuring, if mergers, acquisitions, or asset disposals result in changes or transactions equivalent to 35% or more of total assets, companies must prepare pro forma financial information to illustrate the impact of such material transactions on unadjusted financial information. These reports must be audited with an unmodified opinion. Depending on the timing of IPO relative to restructuring, offering documents may require different sets of reports, ranging from pro forma information for the two years preceding the restructuring to financial statements for the first reporting period after acquisition. This is a mandatory requirement to meet profitability requirements and the absence of accumulated losses for IPO approval. 

Corporate restructuring prior to IPO is a complex process requiring thorough preparation. According to EY’s Global IPO Trends Report for Q1 2026, in a context of uncertainty – such as tariff concerns and geopolitical conflicts affecting energy prices – capital flows tend to concentrate on a smaller group of companies with strong financial foundations, proven track records, and transformative market potential. Therefore, to execute a successful and attractive IPO, companies must work with professional advisors to comprehensively plan and address tax risks, optimize obligations, comply with competition laws and safeguard controlling shareholders’ rights. 

A well-designed restructuring plan not only helps companies overcome regulatory barriers but also improves IPO value and opens up sustainable growth opportunities.

This article was first published in Vietnam Investment Review, No. 1810, 22-28 June 2026