Tax department’s guidance on corporate income tax for capital transfers involving real estate

The Tax Department has issued specific guidance on corporate income tax (CIT) related to capital transfer activities in Official Letter No. 159/CT-CS, dated March 14, 2025.

Specifically, a company sold its wholly owned single-member limited liability company (LLC) in the form of a capital transfer that included real estate assets. The company is currently facing difficulties in determining how the income from this transaction should be declared and what CIT rate should be applied.

The Tax Department emphasized the following principles for determining taxable income from capital transfers: If a company sells its wholly owned single-member LLC in the form of a capital transfer that includes real estate, the transaction must be declared and taxed as a real estate transfer rather than as a capital transfer. Accordingly, the applicable CIT rate for this type of transaction will be the same as that for real estate transfers, which is 20%.

Thus, based on the Tax Department’s guidance, businesses conducting capital transfers involving real estate assets within a single-member LLC must declare and pay CIT at the rate applicable to real estate transfers.

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