To: VRB Vietnam Co., Ltd.
Address: 10^th Floor, Lottery Tower, No. 77 Tran Nhan Ton Street, Ward 09, District 5, Ho Chi Minh City
Tax code: 0312450438

In response to your official dispatch dated November 28, 2016 on tax on capital transfer (with documents additionally submitted on January 03, 2017), the Department of Taxation of Ho Chi Minh City hereby gives guidance as follows:

Clause 1 Article 14 of the Circular No. 78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance providing guidelines on corporate income tax (CIT) stipulates the scope of application of tax policies to capital transfer as follows:

“Income from capital transfer of an enterprise means the income earned from the transfer of a part or the whole of that enterprise’s investment in one or many other entities (including selling of enterprises). Time of determination of income from capital transfer is the time of transfer of capital ownership.

In case an enterprise sells an entire single-member limited liability company which it owns by transferring capital and real estate, it shall declare and pay CIT on real estate transfer and complete the CIT return (Form No. 08) enclosed herewith.

In case an enterprise transfers its capital in exchange for assets or other material benefits (shares, fund certificates, etc.) and generates income, it shall pay CIT.  The values of assets, shares, fund certificates, etc. shall be determined according to their market prices at the time of transfer.”

Point b Clause 7 Article 16 of the Circular No. 151/2014/TT-BTC dated October 10, 2014 of the Ministry of Finance stipulates CIT declaration on capital transfer as follows:

“CIT shall be declared whenever it is incurred by any foreign organization that does business in Vietnam or earns income in Vietnam without following the Law on Investment and the Law on Enterprises (hereinafter referred to as “foreign contractor") and carries out capital transfer.

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The CIT declaration dossier must be submitted within 10 (ten) days from the date on which the competent authority approves the capital transfer or from the transfer date agreed upon by the parties and specified in the capital transfer contract (if an approval by competent authority for the capital transfer is not required).

CIT declaration dossier includes:

- A CIT return (regarding income from capital transfer) (Form No. 05/TNDN issued together with Circular No. 156/2013/TT-BTC);

- A photocopy of the transfer contract. If the transfer contract is written in a foreign language, it must be translated into Vietnamese and shall, inter alia, include the following contents: the transferor, the transferee, transfer date, transfer contents; rights and obligations of each party; contract value; payment deadline, method and currency.

- A photocopy of the decision on approval for capital transfer issued by a competent authority (if any);

- A photocopy of the certificate of capital contribution;

- Original documents proving transfer expenses.

If additional documents are required, the tax authority shall notify the transferee within the day in which the dossier is received directly, or within 03 (three) days from the day on which the dossier is received by post or electronically.

Place of submission of CIT declaration dossier:  CIT declaration shall be submitted to the tax authority where the foreign organization transferring capital has registered to pay CIT.”

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Your company operates under the business model of a single-member limited liability company whose owner is Jade 1362 GmbH&Co.Neunte Verwaltungs KG (“Jade 9”) that is a partnership established under the law of Federal Republic of Germany (consisting of two members: TIN Brillant Services GmbH (“TIN Brillant”) and Jade 1362. GmbH (“Jade 1362”)). Now Jade 1362 is divided from Jade 9 which will merge with TIN Brillant in accordance with regulations of the law of Federal Republic of Germany and thus TIN Brillant will receive all assets and debts of Jade 9 (including its investment in Vietnam). When following procedures for transfer of the company’s ownership from Jade 9 to TIN Brillant, your company must determine, declare, withhold and pay the CIT on capital transfer on behalf of the foreign contractor according to the abovementioned regulations (including the case where no income is earned).

Your company is requested to strictly comply with the legislative documents referred to herein.

PP. DIRECTOR
DEPUTY DIRECTOR




Nguyen Nam Binh