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Posted in: Corporate
On 26 June 2015, the Ministry of Planning and Investment (MPI) issued Official Letter 4211 providing temporary guidance for the implementation of the Enterprise Law 2014. Under OL 4211,
In April 2015, the General Department of Tax (GDT) instructs a provincial tax department to consider imposing corporate income tax (CIT) on a capital transfer transaction whereby a Vietnamese buyer acquires the entire equity interest of a Hong Kong company (Offshore Target Co) from a foreign seller. The Offshore Target Co holds shares in a joint venture company in Vietnam. The GDT considers the purchase price that the foreign seller receives from the Vietnamese buyer for sale of shares in the Offshore Target Co as “taxable income arising in Vietnam” (thu nhập chịu thuế phát sinh tại Việt Nam) of the foreign seller under Decree 12/2015. The GDT’s view could raise a tax concern over capital transfer in an offshore company which in turn have shares in a Vietnamese company, at least in case the buyer is a Vietnamese company.
Any State-owned enterprise in which the State has more than 50% voting right is ultimately controlled by the State. Therefore, technically transactions between any two State-owned enterprises or between one State-owned enterprise and a State authority (who is also controlled by the State) may arguably be considered as related party transactions. This is because the definitions of related persons under Enterprise Law 2014 and Securities Law 2006 include persons who can control the decision making of another company or who are under control of the same person.
Determination whether an enterprise is a State-owned enterprise may be important in certain context. For example,