The 2015 First Tax Decree

When it comes to tax policy, the government starts 2015 with the Decree 12/2015/ND-CP (“Decree 12”) dated 12 February 2015. Decree 12 appears to keep up the spirit of Law No. 71/2014/QH13 (“Amendment Law”) on amendment of laws on taxes, which is adopted on 26 November 2014 and takes effect on 01 January 2015. The Amendment Law is designed to clarify and reduce bureaucracy and further liberalise tax laws. Decree 12 provides implementation for the Amendment Law and amends and supplements current applicable tax decrees in respect of corporate income tax (“CIT”), personal income tax (“PIT”), value-added tax (“VAT”), natural resources tax (“NRT”), and tax administration. This legal briefing highlights salient changes and new provisions that may interest the business.

  • CIT

Taxable Income of Foreign Company

Decree 12 expands on the sources of taxable income of foreign companies by adding income generated from transfer / assignment of equity, investment projects, rights to contribute capital, rights to participate in investment project, rights to explore, exploit and processing natural resources and minerals in Vietnam.

Educational Expenses are Deductible

Decree 12 allows businesses to deduct expenses for vocational and training education in accordance with the law. As this is a general regulation, there is likely to be further guidance for this provision.

Changes of Incentive policy

At the time of investment certificate issuance, the investor shall be entitled to a CIT incentive. In the event the CIT regulations change and the investor still satisfies conditions to obtain CIT incentive in accordance with new regulations, the investor may choose the incentive schemes in either old or new regulations. If the investor chooses to have the incentive under the new regulations, the new incentive shall be applied from the effective date of the new regulations.

  • PIT

Tax Withholding for Capital Assignment

Decree 12 includes a provision in the event that an individual transfers their equity ownership in a company. Accordingly, the company is responsible for ensuring that the transferor will submit documents proving his or her completion of the tax obligation in respect of the transferred equity before the company register the change of ownership in accordance with the laws. If the company registers such a change of ownership without documents proving completion of tax obligation, the company will be responsible to pay the PIT on behalf of the transferor.

Securities Transfer

Under Decree 12, a taxable income from securities transfer shall be determined upon the selling price of each transfer. The selling price shall be (i) the prices on the stock exchange if the securities are listed on the stock exchange; or (ii) if it is not the case, the prices inscribed in the transfer agreement or the prices in accordance with the accounting books of the company (whose securities are transferred) at the time of the most recent financial statements prior to the transfer.

Real Estate Transaction

Under Decree 12, a taxable income from a real estate transaction shall be determined upon the selling price of each transfer. The selling price shall be determined upon the price inscribed in the transfer agreement. The time to impose the PIT on a real estate transaction shall be (i) the date that the buyer registers for its ownership and/or right to use the real estate if the transaction agreement provides that the buyer shall pay the PIT on behalf of the seller; or (ii) if it is not the case, the date that the transaction agreement takes effective in accordance with the laws.

Decree No. 12/2015/ND-CP shall take retroactive effect from 01 January 2015, i.e., the date which the Amendment Law takes effective.

By Vietnam Law Insight, LNT & Partners

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

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