A typical share sale agreement (SPA) takes effect on signing. Closing, when the buyer and the seller exchange money and title to the shares, usually comes later, once conditions have been met. One might expect tax on the sale to be imposed when the shares are sold, that is, at closing. But where a foreign enterprise with no permanent establishment (Foreign Seller) in Vietnam sells shares in an unlisted Vietnamese company to a resident buyer, Article 5.2(a) of Circular 20/2026 provides that revenue is taxed when the initial capital-transfer contract takes effect. On the face of that Article, the SPA can be that contract, and signing can be when it takes effect. The fact that closing has not yet occurred might not, by itself, defer the tax. Until Circular 20/2026, that was not so.

This post deals with a foreign enterprise with no permanent establishment in Vietnam, or with a permanent establishment to which the gain is unrelated. It does not deal with an individual seller, whose share transfer gives rise to personal income tax (PIT), discussed here.

1. What changed

Until Decree 320/2025 and Circular 20/2026, the legal documents on corporate income tax (CIT) then in force did not treat the taxable event as the moment the initial capital-transfer contract takes effect:

- Under Article 14.1 of Circular 78/2014, the taxable income from transferring capital arises at the transfer of ownership; and

- Under Article 13.1(b.10) of Circular 103/2014, the taxable revenue from transferring a foreign contractor’s arises at the time of transfer.

A transfer of unlisted joint stock company (JSC) shares might have fallen under either provision. Either way, the reasonable reading was that the tax fell due on closing of the transfer, not on signing.

Decree 320/2025 now treats a transfer of shares in a non-public JSC as a capital transfer (chuyển nhượng vốn). For this Foreign Seller the tax is 2% of taxable revenue. Article 5.2(a) of Circular 20/2026 then introduces a CIT rule on a Foreign Seller’s revenue from transferring unlisted JSC shares that looks like the old PIT rule in Article 11.1(c) of Circular 111/2013: taxable revenue arises when the initial capital-transfer contract takes effect.

2. Two timings for the same kind of deal

The current legal texts set out the taxable timing for the same kind of deal differently:

Seller	What is transferred	When the tax arises
Vietnamese enterprise	Capital (including unlisted JSC shares)	Transfer of ownership
Foreign Seller	Public, listed or registered-for-trading securities	Time of transfer (different wording, but it can be read as the same ownership-transfer moment that applies to a Vietnamese enterprise seller)
Foreign Seller	Unlisted JSC shares	When the initial capital-transfer contract takes effect

It is hard to see why the timings differ. CIT should arise only once revenue or income has arisen. If tax is imposed at signing and the deal then fails to close, the State is taxing revenue that has not been earned. That is not a reasonable result.

3. What this means for the Vietnamese buyer

Where buying from a Foreign Seller, if the tax arises at signing, the Vietnamese buyer may have to declare and pay the 2% CIT before closing. If closing never happens after tax has been paid, it is not clear whether the tax can be recovered from the tax authority. The party that paid therefore risks losing that money on a failed deal.

This post is written by Ha Thanh Phuc.

Vietnam Business Law