WILL NON-RESIDENT INDIVIDUALS STILL BE SUBJECT TO THE 0.1% TAX RATE ON CAPITAL TRANSFERS?
From July 1st 2026, Law on Personal Income Tax 2025 introduces significant changes to the taxation of income derived from capital transfers by non-resident individuals in Vietnam.
Accordingly, personal income tax (“PIT”) applicable to capital transfer activities will be calculated on a per-transaction basis, regardless of whether the transaction is conducted in Vietnam or overseas (Article 23 of Law on Personal Income Tax 2025).
Specifically:
| Law on Personal Income 2007 | Law on Personal Income 2025 | ||
| Non-resident individuals | Purchase price and relevant expenses relating to the capital transfer can be determined | 0.10% | 20% |
| Purchase price and relevant expenses cannot be determined | 0.10% | 2% |
Regarding tax declaration procedures, pursuant to Point g Clause 4 Article 8 of Decree No. 120/2020/ND-CP, PIT arising from capital transfers must be declared on a per-transaction basis. The declaration may be filed directly by the individual or by another organization or individual on the taxpayer’s behalf in accordance with applicable regulations.
These changes may significantly impact transaction structures and tax costs in M&A transactions, capital transfers, and foreign-invested restructuring transactions. Investors and businesses are therefore advised to proactively review transaction structures, cost-basis documentation, and supporting records to optimize tax obligations once the new regulations take effect.