Question:
1. Company A contributed capital to establish Company B with registered capital of 1 billion. VND. After a period of operation without profit, Company A transfers its shares to 2 other members (transforming it into a two-member limited liability company) at a transfer price of 900 million VND. In this case, does Company A need to declare and pay any taxes when transferring the contributed capital?
2. When Company A contributes capital to Company B, can the contributed capital be in the form of cash? If it is contributed in cash, what violations does the company commit, and what is the penalty?
Answer:
Based on point d, clause 8, Article 4 of Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance, which guides Value Added Tax (VAT) regulations and sets the VAT rate at 10%, and Item 3 of Article 1 of Circular No. 26/2015/TT-BTC dated February 27, 2015, which amends and supplements point a, clause 8 of Article 4 (as amended and supplemented in Article 8 of Circular No. 151/2014/TT-BTC dated October 10, 2014, by the Ministry of Finance), entities subject to VAT must pay VAT at the rate of 10% on the management fee for foreign currency expenditure incurred by the bank when customers use their credit cards.
Based on Circular No. 39/2014/TT-BTC dated March 31, 2014, of the Ministry of Finance, which provides guidance on invoices and sales documents for the sale of goods and provision of services.
Based on Circular No. 78/2014/TT-BTC dated June 18, 2014, of the Ministry of Finance, which provides guidance on Corporate Income Tax (CIT).
Based on Circular No. 09/2015/TT-BTC dated January 29, 2015, of the Ministry of Finance, which provides guidance on financial transactions of enterprises according to the provisions of Article 6 of Decree No. 222/2013/NĐ-CP of the Government. In accordance with the above regulations:
In the case of Company A transferring its contributed capital in Company B, Company A is required to issue a VAT invoice. However, if the transfer is made without a VAT invoice, Company A is still subject to VAT regulations, and the VAT amount should be included as part of its operating expenses.
If Company A contributed capital in the form of cash to Company B, this is not in accordance with the regulations stated in Article 6 of Decree No. 222/2013/NĐ-CP of the Government. The company may be subject to penalties as specified in Article 5 of Circular No. 09/2015/TT-BTC of the Ministry of Finance. It is recommended that the company contact the State Bank of Vietnam for specific guidance on the penalties.
