Vietnam - Surplus from capital increase not to be taxed

Surplus from share offering for capital increase will not be taxed, according to the guidance documents of CIT Law which General Department of Taxation will be completing for submission to Ministry of Finance.

These guidance documents include Decree 124/2008/ND-CP, Decree 1222011/ND-CP. Accordingly, when joint stock companies offer more shares to raise capital, the difference between offering price and par value will not be subject to CIT.

In case earnings arising from share conversion at the time of corporate separation or merger will be taxed. The enterprises that transfer securities to get assets or other material benefits (such as shares, fund certificates) must pay CIT.

In case transfer contracts do not concern payment price or share price is not matched with market price, taxation agencies have right to examine and define transferring prices.

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