Leveraging Tax Reform: A Breakthrough Opportunity for Vietnam’s M&A Market

Highlights

Vietnam’s economy is regaining momentum, and mergers and acquisitions (M&A) remain a strategic pathway for both domestic and international enterprises. One key driver of this resurgence is the government’s ongoing effort to refine its regulatory framework—especially through tax reforms that shape how capital transfers are treated.

According to the Ministry of Finance, the draft decree guiding the implementation of the 2025 Corporate Income Tax (CIT) Law proposes several groundbreaking measures to clarify tax obligations in share or equity transfers. The move is seen as a crucial step to resolve long-standing issues faced by shareholders and investors in M&A transactions.

A central feature of the draft is the fixed 2% tax rate applied to the gross proceeds from capital transfers by foreign investors holding shares in unlisted Vietnamese companies. This rule would cover both direct and indirect transfers, while exempting internal restructurings within the same corporate group. By taxing gross revenue instead of net income—often difficult to calculate and prone to disputes—the new mechanism reduces uncertainty and the risk of conflicting tax declarations.

Deloitte Vietnam notes that “a clearly defined tax rate could significantly reduce real-world disputes,” allowing investors to anticipate their tax liabilities and plan M&A activities with greater precision. The simplified approach also lowers the risk of retrospective tax assessments, a concern that has previously deterred foreign investors involved in multi-year share transfers.

These regulatory changes are expected to invigorate Vietnam’s M&A market. As tax obligations become more predictable, more companies are likely to pursue mergers, acquisitions, or restructuring initiatives. With a legal environment that is increasingly transparent and aligned with international norms, Vietnam’s M&A sector is projected to grow strongly in the coming years. Investment inflows are expected to accelerate across high-potential sectors such as renewable energy, fintech, industrial real estate, healthcare, and consumer retail.

The government’s decision to revise the Corporate Income Tax Law and issue detailed guidance on capital transfer taxation reflects a broader strategic aim: strengthening Vietnam’s competitiveness in the race for foreign direct investment (FDI). At a time when regional peers are also pursuing aggressive reforms, Vietnam’s proactive stance signals its commitment to maintaining an open, stable, and investor-friendly business environment.

To fully capture the coming wave of M&A activity, Vietnamese enterprises must prepare strategically rather than passively waiting for investors. Three priorities stand out: Enhance financial transparency – adopt international accounting standards, ensure compliance, and build investor trust to achieve better valuations; Strengthen corporate governance – improve internal decision-making, adopt global risk management practices, and enhance operational efficiency; Stay policy-aware – monitor regulatory updates and consult professional legal and tax advisors to manage complex transactions effectively.

By doing so, Vietnamese companies can position themselves as credible and competitive partners in an increasingly dynamic M&A market—one shaped by clearer tax rules and stronger investor confidence. 

Source: Vietnam Investment Review