Vietnam’s New Capital Gains Tax Rules For Foreign Enterprises

On 14 June 2025, the National Assembly passed the amended Corporate Income Tax Law 2025 (CIT Law 2025). Among other things, this legislation is expected to bring significant changes in determining the method of calculating tax for capital transfer and securities transfer transactions (Capital Gains Tax) undertaken by foreign companies. This post aims to provide a comprehensive and clear overview by analyzing and comparing these new regulations with those stipulated in the Corporate Income Tax Law 2008 (CIT Law 2008).

1)         Definition of Taxable Income Arising in Vietnam for Foreign Companies

A key area of adjustment in the CIT Law 2025 relates to the definition of taxable income arising in Vietnam for foreign companies, making it more transparent.

Under the CIT Law 2008, the specific definition of such income was not explicitly clarified within the law itself; rather, it was detailed in Decree 218/2013 guiding the CIT Law 2008. In contrast, the CIT Law 2025 has directly incorporated this definition, clearly stating that taxable income arising in Vietnam for foreign companies is income originating from Vietnam, irrespective of the location where business activities are conducted.

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Written by Nguyen Quang Vu On In ,

Law on Management of State Capital 2025 – A Change in Direction

A pdf version of this post can be downloaded here.

In June 2025, the National Assembly passed a new Law on Management of State Capital (Law on State Capital 2025) replacing the same law issued in 2014 and amended in 2018 (Law on State Capital 2014). The Law on State Capital 2025 have given the individuals managing State-owned (or controlled) enterprises (i.e., the Members’ Council or the Chairman) substantial flexibility to run their businesses. In this post, we discussed some key changes introduced by the Law on State Capital 2025. A comparison between the Law on State Capital 2025 and Law on State Capital 2014 by Deep Research of Gemini 2.5 Pro can be found here.

Clearer scope of application

Law on State Capital 2025 clearly provides that enterprises which more than 50% charter capital or voting shares of which is held by the State are also subject to this law. This point is not clear under the Law on State Capital 2014.

Definition of State Capital

Under Law on State Capital 2025, State capital in a State-owned enterprise only includes the contributed capital portion held by the State out of the total owner's equity of the enterprise. In addition, the Law on State Capital 2025 defines State capital by reference to the holding percentage of the State. This new approach is a significant change from the Law on State Capital 2014 because:

  • The Law on State Capital 2025 excludes other funding sources such as the state budget, public assets, and development investment funds from the definition of "State capital" within an enterprise. Instead, the Law on State Capital 2025 classifies these as sources of capital and assets to be used for investing state capital in enterprises; and

  • in many scenarios, the holding percentage is more important than the absolute amount

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Written by Nguyen Quang Vu On In

Legal Challenges Arising from Vietnam's Administrative Reorganization

Introduction

From 1 July 2025, Vietnam’s local Government system formally operates according to a new “two-tier” system in 34 provinces as opposed to the old “three-tier” system in 63 provinces. In the new system, there are only two levels of local Government including provinces (tỉnh) and wards (xã, phường). Government agencies at district level no longer exist. Vietnam also combines several existing wards to form a larger ward. As a result, we estimate that Vietnam now has about 3,300 local people’s committees down from 10,000 local people’s committees.    

To achieve this, by 1 July 2025, the National Assembly and the Government have, among other things, amended the Constitution, amended the Law on Organisation of Local Government, issued 34 resolutions and 28 Decrees to restructure the local government system. Unfortunately, despite such herculean efforts, it appears that the new regulations have not addressed adequately various legal issues arising from the restructuring. In this post we will discuss some of these issues. More information can be found from the attached research generated by the latest AI LLM from Google (Gemini Pro 2.5).

No clear geographical boundaries between various local authorities at wards levels.  

It appears that on 1 July 2025, the Government did not establish clear geographical boundaries between the newly established wards. This is because the Standing Committee of the National Assembly sets a deadline of 30 September 2025 for the Government to do so for each province. Until a source of truth of the geographical boundaries at wards level is set up, many companies and individuals may not know for sure the correct addresses that they may use in their operations including application submitted to the authorities, invoices issued to clients, or contracts.

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Written by Nguyen Quang Vu On In ,

Foreign Investment in Vietnamese Credit Institutions: Key Changes in Decree 69/2025

The Vietnamese government recently issued Decree 69/2025 (effective 19 May 2025), which amends Decree 01/2014 regarding foreign investor’s share purchase in Vietnamese credit institutions. Here are the main changes:

1.         Scope of application

Decree 69/2025 clarifies that foreign-invested economic organisations (FIEOs) which are required to comply with investment conditions and procedures applicable to foreign investors must now follow the same rules (in Decree 01/2014 as amended by Decree 69/2025) applicable to foreign investors when buying shares in Vietnamese credit institutions.

Under the Investment Law 2020, these FIEOs refer to entities where foreign investors hold a majority of the charter capital (FIEO-F1). Notably, Decree 69/2025 does not explicitly state whether it applies to economic organisations majority-owned by an FIEO-F1, even though such economic organisations are also treated as foreign investors under the Investment Law 2020.

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Written by Nguyen Quang Vu On In ,