Contributing Assets as Capital to Establish an Enterprise in Vietnam: Is VAT Declaration and Payment Required?

Short answer: Contributing assets (machinery, factories, land use rights, vehicles, etc.) as capital to establish an enterprise is a transfer of asset ownership from the contributor to the receiving enterprise — in principle, it does not trigger any VAT declaration or payment obligation for the capital contribution transaction itself. However, asset valuation, transfer of ownership and related costs must comply with the Law on Enterprises 2020 and current VAT legislation (Law on Value-Added Tax 2024, Law No. 48/2024/QH15). Where the contributed asset is subject to ownership registration, ownership transfer procedures must be completed as prescribed.

Legal basis

• Law on Enterprises 2020, as amended by Law No. 76/2025/QH15 — Article 34 (contributed assets), Article 35 (transfer of ownership of contributed assets), Article 36 (valuation of contributed assets);
• Law on Value-Added Tax 2024 (Law No. 48/2024/QH15) — non-taxable VAT objects;
• Law on Corporate Income Tax 2025 (Law No. 67/2025/QH15) — income from asset transfers.

Which assets may be used to contribute capital when establishing an enterprise?

• Vietnamese Dong, freely convertible foreign currencies, gold;
• Land use rights, intellectual property rights, technology, technical know-how;
• Other assets that can be valued in Vietnamese Dong (machinery, equipment, factories, means of transport, etc.).

Conditions: the asset must be lawfully owned by the contributor; it must not be in dispute or subject to enforcement distraint.

Is VAT payable on asset capital contributions?

Contributing assets as capital is a transfer of asset ownership to the receiving enterprise to form charter capital — it is not a sale of goods or provision of services. Under the principles of VAT legislation, an asset contribution transaction (with complete contribution dossiers, valuation minutes and ownership transfer procedures) is not subject to VAT declaration or payment.

Key distinctions:

• Contributing assets as capital: transferring ownership to the enterprise — no VAT declaration required;
• Selling assets to the enterprise: an ordinary asset transfer — VAT declaration and payment are required (if the asset is taxable), as well as income tax on the transfer;
• Where contributed assets are later sold or liquidated by the enterprise: the sale of such assets is subject to VAT obligations as usual.

As the Law on Value-Added Tax 2024 (48/2024/QH15, as amended by Law No. 149/2025/QH15) has changed the regulatory framework, you should cross-check the provisions on non-taxable objects in the currently effective text, or consult a lawyer to determine the exact position for your specific case.

Procedures for contributing assets as capital

Step 1. Valuation of contributed assets

Contributed assets must be valued by the founding members/shareholders on a consensus basis, or by a valuation organization. Where the valuation exceeds the actual value, the members are jointly liable for the difference.

Step 2. Transfer of ownership

• For assets subject to ownership registration (land use rights, automobiles, aircraft, etc.): the contributor must complete ownership transfer procedures to the enterprise at the competent state authority; the transfer of ownership is not subject to registration fees (per the regulations on registration fees applicable to contributed assets);
• For assets not subject to ownership registration: the contribution is effected by a handover minutes with confirmation of the parties.

Step 3. Recognition of capital contribution

The enterprise records the contributed assets in its accounting books and issues capital contribution certificates/shares to the contributors.

Frequently asked questions

Is income tax payable when contributing land use rights as capital?

A transaction contributing land use rights (transferring land use rights to the enterprise) in principle does not trigger VAT; however, it may involve income tax on the transfer of land use rights depending on the form and dossier of the transaction — it must be clearly determined whether it is a capital contribution or a transfer.

What if contributed assets are overvalued?

The founding members/shareholders are jointly liable for the difference between the valued amount and the actual value of the contributed assets at the time the valuation is completed.

Can mortgaged assets be contributed as capital?

Not advisable. Assets subject to transfer restrictions (mortgage, distraint, dispute) do not meet the conditions for capital contribution; such restrictions must be released and resolved before contribution.

Notes on applying current legislation

The line between “contributing assets as capital” and “selling assets to the enterprise” determines tax obligations — the dossier must reflect the true nature of the transaction (contribution minutes, valuation, ownership transfer) to avoid the tax authority recharacterizing it as a sale and imposing back taxes. Contact ANT Legal lawyers at 0966.475.966 for advice on structuring tax-safe capital contribution transactions.

Common risks to note

• Confusing capital contribution with asset sale — triggering tax disputes;
• Valuation of contributed assets not reflecting actual value;
• Failure to complete ownership transfer procedures for assets subject to registration;
• Contributing assets that are mortgaged or in dispute.

How can ANT Legal help?

ANT Legal advises on procedures for contributing assets as capital, valuation, transfer of ownership; reviews related VAT and income tax obligations; drafts contribution dossiers and enterprise registration. For prompt advice, please contact our lawyers at 0966.475.966.

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