Is the increase in assets subject to corporate income tax? This is a crucial legal question many businesses ask when carrying out mergers, consolidations, or restructuring. According to the new regulations... Law on Corporate Income Tax No. 67/2025/QH15The difference between the revalued value and the book value is not only an accounting issue but also directly impacts tax obligations. Understanding this correctly will help businesses mitigate the risk of tax arrears and optimize compliance.
Regulations regarding income from asset revaluation.
Under the current tax system, any increase resulting from the revaluation of assets during division, separation, merger, or capital contribution is classified as other income. This forms the basis for tax authorities to manage the value added arising outside of core business activities.
Key legal principles to understand:
- Law 67/2025/QH15 clearly defines the difference resulting from asset revaluation as taxable income.
- Applicable to cases involving: capital contribution in the form of assets, mergers, consolidations, and conversion of business type.
- The taxable value is the difference between the revalued amount and the book value at the time of the transaction.
Understanding this regulation correctly is fundamental to accurately answering the question: Is the increase in assets subject to corporate income tax? In each specific situation.
Is the increase in assets resulting from a merger subject to corporate income tax?
Not all cases are the same. Whether an increase in assets is subject to tax depends on the nature of the transaction and the type of business.
How to determine taxable income
When a merged company conducts an asset revaluation: If the post-revaluation value is higher than the book value, taxable income is generated.
This income:
- Recorded once as other income in the period in which it arises.
- Because the merged company declares and pays taxes before ceasing operations.
This means: In most cases, to answer the question of whether the increase in assets is subject to corporate income tax, the answer is yes.
Typical cases of tax obligations
Here's a quick classification guide for businesses to refer to:
- State-owned enterprises under the 100% capital structure, upon equitization or merger: are exempt from taxes according to preferential regulations.
- Private or non-state-owned enterprises: Must pay tax when an increase in tax difference arises.
- Contributing assets to a joint venture: The difference is still subject to tax.
Therefore, except for special cases with preferential treatment, most situations result in an increase in assets subject to corporate income tax according to general regulations.
How is corporate income tax calculated on the increase in assets?
The difference is determined by:
|
The difference = Revaluation value of the asset – Book value |
The positive difference will be recorded as other income and will be the basis for calculating tax. This is a core factor in determining whether an increase in assets is subject to corporate income tax.
Addressing the issue of whether the difference in increased assets is subject to corporate income tax.
In practice, many businesses confuse the regulations in the Circular with the guidance from the tax official letter, leading to errors in determining whether the increase in assets is subject to corporate income tax.
Principles for applying the text:
- Official documents (for example, Official Document 14879/TCT-CS) are only for guidance purposes in specific cases.
- The new Law and Circulars are the official legal basis.
- If there is a difference, the document with higher legal validity shall prevail.
Incorrect application can lead to:
- Subject to back taxes
- Penalty for late payment
- Increased risk during inspections.
Important considerations that businesses should not overlook.
To avoid risks, please note:
- Reassessment for merger purposes may result in the business being subject to taxes.
- Re-evaluate according to accounting standards and are generally not subject to tax unless ownership is transferred.
- Verify the accuracy of the book value (original cost, accumulated depreciation).
- Proactively seek written advice from the tax authorities for complex cases.
Source: Article by LuatVietnam
Based on practical experience, MAN – Master Accountant Network has assisted many businesses. A common problem is the confusion between revaluation for restructuring purposes and revaluation according to accounting standards, leading to incorrect tax declarations. Businesses can refer to the following information. tax accounting services or tax settlement To proactively review and fulfill obligations to avoid being subject to retroactive collection.
Conclude
From a legal and practical perspective, it can be affirmed that in most cases, the increase in assets is subject to tax and is included in other income when determining corporate income tax. Only in a few specific cases, such as the restructuring of state-owned enterprises according to an approved plan, may tax exemption be considered.
The crucial point is not whether or not the transaction is submitted, but rather correctly identifying the nature of the transaction, recording it at the right time, and using the correct declaration method. Errors at any stage can lead to significant risks of tax arrears and penalties during tax audits.
Proactively reviewing valuation documents, checking accounting records, and consulting with tax authorities early on will significantly reduce legal risks. Therefore, instead of reacting passively during tax settlement, businesses should approach the issue systematically from the merger or restructuring planning stage. This is key to ensuring compliance, optimizing tax costs, and ensuring stable long-term operations.
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Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Answering questions about whether an increase in assets is subject to corporate income tax.
Is the increase in assets subject to corporate income tax in all cases?
Not entirely. However, in most situations, the increase in asset value is subject to corporate income tax and is included in other income. Only in some special cases, such as state-owned enterprises undergoing restructuring according to an approved plan, are they exempt from tax.
Which businesses are required to declare this difference in tax?
The business owning the assets at the time of revaluation (usually the merged business) is responsible for declaring and paying taxes before ceasing operations. Therefore, when considering whether an increase in assets is subject to tax, it is necessary to correctly identify the entity incurring the obligation.
Is internal asset revaluation subject to taxation?
If the revaluation is solely for internal accounting purposes and does not involve a transfer of ownership, it is generally not subject to tax. However, if it is associated with a transaction such as capital contribution or merger, the tax liability must still be considered.
