The Welcomed Reverse of PIT for Private Share Transfer

On December 10, 2025, Vietnam released the new Law on Personal Income Tax (“PIT”), taking effect from July 1, 2026 (the “2025 PIT Law”).  The Government then put forward a draft decree guiding the 2025 PIT Law (the “Draft PIT Decree”), which included a radical change on the tax rates at 20% on gain for transfer of shares in private joint stock companies (in comparison to the previous PIT rate of 0.1% on transfer price).  The Draft PIT Decree was met with rather negative reactions from investors and other stakeholders in the Vietnam market, voicing concerns that such a substantial increase in capital gain tax could hamper individuals’ participation in domestic M&A activities.

Recently, the investors have breathed a sigh of relief when this provision has been removed in Decree 253/2026/ND-CP which was adopted on June 30, 2026, taking effect from the same day as the 2025 PIT Law (i.e., July 1, 2026) (“Decree 253”).  Decree 253 effectively mirrors the principles in previous regulations (i.e., the 2007 PIT Law and its guiding regulations), retaining the 0.1% transfer price PIT rate for both public and private share transactions.  The reverse by Decree 253 is a highly welcomed approach, signifying the Government’s continued support for the development and growth of the market, and is expected to help with the recovery of M&A transactions in Vietnam which experienced some setbacks in the past recent years, largely due to macro issues such as on-going geopolitical conflicts and trade wars.