Tax Alert | September 2025 | Latest Draft Decree guiding the Law on Corporate Income Tax 2025 – Vietnamese Capital Gains Tax for Foreign Investors

This Tax Alert provides key updates and notable changes related to the taxation of capital gains in Vietnam for foreign investors.

Prior to 1 October 2025, foreign investors deriving capital gains from the transfer of equity in non-public companies are subject to a 20% tax on taxable net gains, calculated as the selling price minus the cost basis of the transferred equity and any related transfer expenses. This applies to both direct and indirect capital transfers.

However, from 1 October 2025, Article 11, Clause 2 of the Corporate Income Tax Law (the CIT Law 2025) No. 67/2025/QH15 dated 14 June 2025 states that the Government will stipulate the corporate income tax to be paid, calculated as a percentage of revenue for foreign enterprises (with or without a permanent establishment) having taxable income derived in Vietnam. This may be interpreted to mean that under the CIT Law 2025 foreign investors deriving capital gains will be taxed at a percentage of the sale proceeds (regardless of whether the transactions incur gains or losses), with the specific percentage to be provided later in a Decree.  

Currently, the Government is drafting a Decree to provide detailed guidance on the implementation of the new CIT Law 2025.

On 5 September 2025, the Government released the second draft version of the Decree. According to Article 11, Clause 2, Point i. of the second draft Decree: The transfer of capital (except for cases of ownership restructuring transactions among entities within the same group that do not change the ultimate parent company of the parties involved who directly or indirectly own the Vietnam entity after the restructuring and do not generate income), and the transfer of assets: (will be taxed at) 2%”. 

As such, it may be interpreted that foreign investors deriving capital gains from both direct and indirect transfers shall be taxed at 2% of the sale proceeds. 

In addition, the second draft Decree also introduces some important points regarding the taxation of capital gains.

Firstly, there is a concept of an exception for “cases of ownership restructuring transactions among entities within the same group that do not change the ultimate parent company of the parties involved who directly or indirectly own the Vietnam entity after the restructuring and do not generate income”. 

Secondly, the second draft Decree for the first time clearly mentions in Article 3, Clause 3 that indirect capital transfer transactions are subject to tax in Vietnam. While taxing indirect transfer transactions in Vietnam is not new, it has not been specifically regulated in the previous mainstream tax regulations but only confirmed via official letters. However, the draft Decree still does not clarify how to determine the sale proceeds attributable to Vietnam in cases of indirect share transfers involving multiple countries.

If this draft becomes an official decree, the taxation on indirect transfer transactions will be officially mentioned in the mainstream tax regulations, and concerns related to the tax implications of internal restructuring transactions will also be addressed.

On 10 September 2025, the Ministry of Finance released a draft Circular providing guidance on the Law on CIT and its implementing Decree for public comments. The Circular is scheduled to take effect on 1 October 2025, aligning with the effective date of both the CIT Law and the Decree.  After public consultations, it is hoped that matters such as guidance on the term “ownership restructuring” will be elaborated in the draft Circular. 

Further developments and changes may occur as the Government continues to refine the draft decree and circular. Therefore, enterprises should continue to monitor further developments on this matter. 

For detailed information, please refer to the attached documents.