Official document No. 454/CT-CS The document issued by the Tax Department on January 23, 2026, is considered a key guiding document in the implementation process. Decree 320/2025/ND-CP Regarding corporate income tax on capital transfer activities of foreign enterprises, this document not only clarifies the method of calculating tax at the rate of 2% on revenue but also standardizes the application time and tax declaration forms on the electronic system.
In the context of increasing M&A and restructuring activities involving foreign elements, Circular No. 454/CT-CS serves as a guiding principle to help businesses, chief accountants, and auditors mitigate the risks of errors, tax arrears, and penalties. This article will comprehensively analyze the new points, practical impacts, and effective compliance roadmap.
Download the article summary here.
Legal overview of Official Letter No. 454/CT-CS
Circular No. 454/CT-CS was issued in the context of significant changes in tax policies regarding capital transfers by foreign investors under Decree 320/2025/ND-CP. Practical difficulties arising from its application, particularly concerning the determination of tax obligations and electronic declaration, necessitate unified guidance from the central tax authority. Therefore, understanding the context and legal basis of this circular is crucial for businesses to apply it correctly and fully.
Context for the issuance of Official Letter No. 454/CT-CS
Official Letter No. 454/CT-CS was issued to address the difficulties faced by the Hanoi City Tax Department regarding the application of Decree 320/2025/ND-CP to the capital transfer activities of foreign investors. In reality, many FDI enterprises have not yet agreed on how to determine their obligations. corporate income tax when transferring equity stakes in Vietnamese businesses.
The lack of synchronization between new legal regulations and the electronic tax filing system has created an urgent need for specific guidance from the Tax Department. Circular No. 454/CT-CS was issued to address this gap and ensure uniformity throughout the tax sector.
Legal basis cited
The content of Official Letter No. 454/CT-CS is based on the following key legal grounds:
- Decree No. 320/2025/ND-CP provides detailed regulations on the Corporate Income Tax Law.
- Circular No. 80/2021/TT-BTC on tax management.
- The regulations regarding the effective date are stipulated in Article 24 of Decree 320/2025/ND-CP.
Clearly citing the relevant provisions gives Circular No. 454/CT-CS high legal standing, providing reassurance to businesses when applying it.
Corporate income tax on capital transfers according to Official Letter No. 454/CT-CS
Corporate income tax on capital transfers is a core point clarified in Official Letter No. 454/CT-CS, especially for transactions with foreign elements. The new regulations clearly define the taxable subjects and shift to a direct tax calculation method based on revenue, replacing the previous profit-based method. Understanding the correct scope of application and tax rates helps businesses proactively declare taxes, comply with the law, and minimize tax risks during inspections and audits.
Applicable objects
According to Official Letter No. 454/CT-CS, the taxable entities are foreign enterprises falling under points b2, b3, and b4 of Clause 1, Article 2 of Decree 320/2025/ND-CP when engaging in capital transfer activities in Vietnam. These are primarily organizations that do not establish legal entities in Vietnam but generate income.
This regulation expands the scope of tax administration, ensuring the correct and full collection of taxes on cross-border capital transfer transactions.
The applicable tax rate is 2% on revenue.
The most notable point in Official Letter No. 454/CT-CS is the affirmation that the corporate income tax rate under the 2% scheme is based on taxable revenue, instead of on profit as before.
| Comparison content | Prior to Decree 320 | According to Official Letter No. 454/CT-CS |
| Tax base | Profit | Revenue |
| Tax rate | 20% | 2% |
| Documents proving expenses | Complicated | No requirement |
The new calculation method simplifies procedures but simultaneously increases tax obligations in some cases.
Cases where tax is not payable
Official document No. 454/CT-CS also clarifies an important exception: internal restructuring transactions within a corporation that do not change the ultimate parent company and do not generate income are not subject to tax. This point needs to be carefully analyzed during tax and audit consultations.
Effective date and time of application
The effective date and timing of implementation are key aspects when deploying Circular No. 454/CT-CS in practice. Correctly determining the tax period not only directly affects the amount of corporate income tax payable but also determines the level of compliance of businesses with the tax authorities. If the wrong timeframe is applied, businesses – especially foreign businesses – may face the risk of retroactive tax collection and penalties during post-tax audits and inspections.
Tax calculation time
According to the guidance in Official Letter No. 454/CT-CS, regulations on capital transfer will be applied from the corporate income tax period of 2025, corresponding to the effective date of Decree 320/2025/ND-CP.
This means that transactions originating in 2025 but declared in 2026 will still be subject to the new regulations.
Risks of applying it at the wrong time.
Many foreign businesses risk being subject to back taxes and late payment penalties if they continue to apply the old calculation method. Circular No. 454/CT-CS is an important basis for tax authorities to conduct inspections and audits after final settlement.
Instructions for filing taxes according to Official Letter No. 454/CT-CS
The declaration of corporate income tax from capital transfers, as per Official Letter No. 454/CT-CS, requires businesses to thoroughly understand both the required forms and the implementation process. Changes to the electronic tax declaration system are not only technical but also directly affect the validity of the documents and the tax obligations. Therefore, updating the correct tax declaration forms and adhering to the declaration process is crucial to minimizing errors and potential risks.
The tax return form has been upgraded.
The Tax Department has upgraded Form No. 05/TNDN on the electronic tax declaration system in accordance with the spirit of Official Letter No. 454/CT-CS. Businesses are responsible for using the latest version to accurately declare their tax obligations.
Incorrect use of the form may result in an invalid application or a request for additional information.
Actual declaration process
The procedure for declaring corporate income tax from capital transfers, as outlined in Official Letter No. 454/CT-CS, includes the following basic steps: determining the transfer revenue, applying the 2% tax rate, preparing Form 05/TNDN, and paying the tax on time.
In practice, many businesses choose to use tax advisory services to minimize legal risks.
The impact of Official Letter No. 454/CT-CS on businesses and auditing.
Circular No. 454/CT-CS has had a significant impact not only on foreign businesses but also on accounting and auditing activities in Vietnam. The new regulations force stakeholders to change their approach to tax management, risk assessment, and compliance planning. Understanding the true impact of this circular is crucial for businesses to proactively manage their tax obligations, and also helps auditors and tax accountants improve the quality of their advice in an increasingly stringent legal environment.
For foreign enterprises
Circular No. 454/CT-CS increases transparency but also increases compliance obligations. Businesses need to review their entire ownership structure, transfer contracts, and internal tax policies.
For accounting and auditing
For auditors and tax accountants, Circular No. 454/CT-CS is an important basis for assessing tax risks, planning audits, and advising FDI clients.
Practical example of applying Official Letter No. 454/CT-CS
A foreign company A transferred 100% of capital in a Vietnamese company for 50 billion VND. According to Official Letter No. 454/CT-CS, the corporate income tax payable is 1 billion VND (50 billion x 2%), regardless of the initial investment cost.
This example illustrates the significant impact of the new regulation on a company's cash flow.
Conclude
Official document No. 454/CT-CS is a key document that clarifies corporate income tax on capital transfers by foreign enterprises in the period 2025–2026. A correct understanding and application of the standard will not only help businesses comply with the law but also limit the risks of tax arrears, penalties, and disputes.
To effectively implement Circular No. 454/CT-CS in practice, businesses should cooperate with specialized consulting firms. MAN – Master Accountant Network provides auditing services., tax accounting, tax consulting, tax settlement and tax reporting For both domestic and international businesses, we are ready to partner with you to build a transparent, standardized, and sustainable tax profile for the long term.
Service contact information at MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Frequently Asked Questions about Official Document No. 454/CT-CS
No. Official document No. 454/CT-CS applies from the tax period of 2025 according to Decree 320/2025/ND-CP.
Only adjustments are needed if the declaration was made incorrectly according to Official Letter No. 454/CT-CS.
Yes. This is a mandatory requirement according to the Tax Department's guidelines. Does Official Document No. 454/CT-CS apply retroactively?
Does the business need to re-settle its accounts?
Is it mandatory to use the new Form 05/TNDN?
