The Tax Department of Hung Yen province has issued Official Letter No. 6746/CTHYE-TTHT dated 28 December 2021 to guide the value-added tax (“VAT”) policy in the merger and separation of companies. The main content is as follows:
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In case of separation of a company that pays VAT by the tax credit method:
When a company is separated, but the VAT amount has not been fully deducted, such company can request a tax refund in accordance with the law or transfer the VAT amount that has not yet been fully deducted to the new company for deduction declaration. The amount of VAT that has not yet been deducted is divided in the proportion corresponding to the value of assets transferred to the new company.
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In case of company merger:
When merging a company that has a project that is in the investment stage and the VAT amount has not been fully deducted, that company can request a tax refund in accordance with the law or transfer the deductible VAT part to the company that receives the merger to continue declaring deductions.
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