On December 10^th, 2025, the National Assembly of Vietnam ratified the Law on Personal Income Tax 2025 (“PIT Law 2025”) with 92.6 per cent vote in favor and the Law on Tax Administration (“TA Law”) with 92.39 per cent vote in favor.

Both the PIT Law 2025 and TA Law 2025 shall take effect on July 1^st, 2026. These laws have a lot of significant changes, but, this article focuses solely on the personal income tax (“PIT”) in relation to mergers and acquisitions – share deal structure applicable to both residents and non-residents.

While the PIT Law 2007 relied heavily on supplementary decrees and circulars to guide the application of taxable income rules, the direct stipulations in the PIT Law 2025 make it easier for taxpayers to identify and fulfill their tax obligations.

To the people who first approach PIT in M&A transactions, it is essential to understand the distinction between a public company and a private company.

The taxable income arising from capital transfer activities under the PIT Law 2025 and the Personal Income Tax Law 2007 (“PIT Law 2007”) remains unchanged. The taxable incomes from capital transfer under Article 3.4 of the PIT Law 2025, involving income derived from the transfer of capital and the transfer of securities.

Previously, PIT was calculated as the selling price minus the purchase price and reasonable expenses. Yet, the PIT Law 2007 did not address cases where the purchase price or associated costs could not be determined. This gap has now been resolved under the PIT Law 2025, ensuring greater clarity and consistency in tax administration.

For residents, the PIT Law 2025 provides clear tax rates: 20% or 2% on capital transfers depending on the circumstances of each transaction, and 0.1% on securities transfers. Specifically, the calculation method stipulated in Article 13 is as follows:

• PIT on income from capital transfer (taxes applied to each transfer transaction).

PIT = taxable income * tax rate 20%

Where: Taxable income = Transfer price – Purchase price – Reasonable expenses

In case the purchase price and the reasonable expenses can’t be determined, PIT shall be calculated as:

PIT = Transfer price * tax rate 2%

• PIT on income from the transfer of securities (taxes applied to each transfer for residents).

PIT = transfer price * tax rate 0,1 %

In essence, the provisions governing non-residents mirror those applied to residents, thereby reinforcing fairness in the taxation system. This marks a significant departure from the earlier framework, where non-residents were subject only to a flat 0.1% tax rate on income from capital transfers in Vietnam. The PIT calculation method for non-residents stipulated in Article 23 shares the same formula as mentioned above, involves a tax rate of 20% and 2% for each transaction, depending on circumstances. The tax rate for income from transferring securities is 0.1%.

Unlike preceding regulations, the PIT Law 2025 and other legislations such as corporate income tax regulations enacted earlier this year regulate that the capital transfer includes share transfer in the non-public shareholding companies.

While the PIT Law 2025 sets out the principles for determining taxable income and applicable rates on capital transfers, the TA Law 2025 has introduced explicit provisions regarding the fulfilment of tax obligations in cases of capital transfer involving both resident and non-resident individuals in Vietnam, which is stipulated in Article 17.6. In contrast to the TA Law 2019, which dealt with this matter only through supplementary guidance, by incorporating such regulations into the TA Law 2025 itself, individuals are now able to more clearly identify and effectively discharge their tax responsibilities in capital transfer transactions.

Regarding the fulfilment of tax obligations, the categories of taxpayers required to make tax declarations can be classified as follows:

• Tax declaration for income from capital transfers: An individual transferor who is a resident must declare personal income tax for each transfer transaction, regardless of whether taxable income arises. For the individual transferor who is a non-resident, the transferee shall be responsible for withholding and declaring tax on a per-transaction basis. In case both transferor and transferee are non-residents, the Vietnamese company shall be responsible for the tax declaration and payment.
• Tax declaration for income from transfers of securities: Every transaction related to securities transfer shall be deducted at the tax rate of 0.1%, whether transactions on the stock exchange or not. Other cases of securities transfer by individuals shall be declared on a per‑transaction basis.
• In cases where a company carries out procedures to change the list of capital contributors or shareholders when transferring capital or securities without documents providing that the capital or securities transferor has fulfilled tax obligations, the company in which the transfer takes place shall be responsible for declaring and paying tax on behalf of the individual.

The PIT Law 2025, together with guiding circulars and decrees, offers a more comprehensive picture of each case and the tax rates applicable to M&A transactions compared to earlier regulations. To capitalize on these new policies, individuals should ensure transparency in their financial information, strengthen their legal knowledge, and proactively stay informed of regulatory updates. Thorough preparation will be the key for individual investors to succeed in M&A transactions.