On August 30, 2024, the General Department of Taxation issued Official Letter No. 3872/TCT-CS regarding tax policy.
According to the letter, if a company is acquired by another company in Vietnam that purchases 100% of the equity from the current shareholders to become the owner of the company, and following this acquisition, the two companies complete the merger process (where the parent company merges into the subsidiary), and if the merger is conducted in compliance with legal regulations, then:
- Value Added Tax (VAT):
When transferring assets for the purpose of merging into another company in accordance with the Enterprise Law, the transferring company must issue an asset transfer order, accompanied by a complete set of asset origin documents. VAT does not need to be declared, calculated, or paid, and VAT invoices are not required to be issued.
- Corporate Income Tax (CIT):
Any differences arising from asset revaluation (if any) during the asset transfer for the merger must be handled according to Point m, Clause 2, Article 3 of Decree No. 218/2013/ND-CP dated December 26, 2013 (amended and supplemented by Clause 1, Article 1 of Decree No. 91/2014/ND-CP dated October 1, 2014) and Clause 14, Article 7 of Circular No. 78/2014/TT-BTC dated June 18, 2014 (amended and supplemented by Article 2 of Circular No. 151/2014/TT-BTC dated October 10, 2014). Any increase in the difference between the amount paid by the owner to acquire 100% of the company's equity and the company's asset value after revaluation should be accounted for as other income in the tax period when determining taxable income for CIT.
The company can depreciate or allocate the revalued asset cost into deductible expenses when determining taxable CIT annually (except for land use rights, which cannot be depreciated or allocated as expenses under regulations).
- Asset Revaluation:
Must be conducted in accordance with Article 4 of Circular No. 45/2013/TT-BTC issued by the Ministry of Finance, which guides the management, use, and depreciation of fixed assets.
