- Capital contribution by property is what?
- Procedures for capital contribution with assets to enterprises
Capital contribution means the use of assets by individuals or organizations to form the charter capital of an enterprise. Contributed assets include the assets specified in Article 35 of the Law on Enterprises 2014:
1. Assets contributed as capital may be Vietnam Dong, freely convertible foreign currencies, gold, value of land use rights, value of intellectual property rights, technology, technical know-how, and other assets. Valuations are denominated in Vietnamese Dong.
2. Intellectual property rights used for capital contribution include copyrights, copyright-related rights, industrial property rights, rights to plant varieties and other intellectual property rights according to regulations. of the law on intellectual property. Only individuals and organizations that are the legal owners of the aforementioned rights are entitled to use those assets to contribute capital.
Step 1: Valuation of assets contributed as capital #
To apply Article 37 of the Law on Enterprises 2014:
Article 37. Valuation of assets contributed as capital
1. Assets contributed as capital other than Vietnam dong, freely convertible foreign currencies, gold must be valued by members, founding shareholders or a professional valuation organization and expressed in Vietnam Dong.
2. Assets contributed as capital upon the establishment of an enterprise must be valued by founding members or shareholders on the principle of consensus or by a professional valuation organization. In case the professional valuation organization conducts valuation, the value of the assets contributed as capital must be approved by a majority of members and founding shareholders.
In case the assets contributed as capital are valued at a higher price than the actual value at the time of capital contribution, the founding members and shareholders jointly contribute by the difference between the valued value and the real value. economics of the assets contributed as capital at the end of the valuation; at the same time, to be jointly liable for losses caused by the intentional valuation of the assets contributed as capital higher than the actual value.
3. Assets contributed as capital in the course of operation, as agreed upon by the owner, the Members' Council for limited liability companies and partnerships, the Board of Directors, for joint-stock companies and capital contributors. pricing or priced by a professional valuation organization. In case the professional valuation organization conducts valuation, the value of the assets contributed as capital must be approved by the capital contributor and the enterprise.
Case If the assets contributed as capital are valued at a higher value than the actual value at the time of capital contribution, the capital contributor, owner, members of the Members' Council, for limited liability companies and partnerships or members The Board of Directors with respect to joint stock companies contributing additionally is equal to the difference between the valued value and the actual value of the assets contributed as capital at the end of the valuation; at the same time, to be jointly liable for damages caused by the intentional valuation of the assets contributed as capital higher than the actual value.
Step 2: Prepare documents for capital contribution with assets: #
The Enterprise Law does not detail the application for capital contribution with assets
In case individuals, non-business organizations contribute capital with assets to limited liability companies or joint stock companies
Apply Clause 13, Article 14 of Circular 219/2013 / TT-BTC. In case a non-business individual or organization contributes capital with assets to a limited liability company or a joint-stock company, the documents applicable to the assets contributed as capital are:
- Capital contribution certificate
- Property delivery minutes.
If the contributed property is newly purchased, unused property and has a legal invoice accepted by the delivery and receipt council, the value of the contributed capital is determined according to the value stated on the invoice, including VAT. ; The party receiving the capital contribution may declare and deduct VAT stated on the asset purchase invoice of the capital contributor.
Where a business organization contributes capital with assets to establish an enterprise
Apply Clause 7, Article 5 of Circular 219/2013 / TT-BTC. Assets contributed as capital to an enterprise must include:
- Business production capital contribution minutes
- Joint venture or association contract;
- The asset valuation record issued by the Capital Contribution Council of the capital contributors (or the valuation document of an organization with valuation function in accordance with law),
- Attach a set of records on the origin of the property.
Step 3: Transfer ownership of assets contributed as capital #
Apply the provisions at Point 1, Article 36 of the Law on Enterprises 2014
Article 36. Transfer of ownership of assets contributed as capital
1. Members of limited liability companies, partnerships and shareholders of joint-stock companies must transfer ownership of assets contributed as capital to the companies according to the following provisions:
a) For assets with ownership registration or land use right value, capital contributors must carry out procedures for transferring ownership of such property or land use rights to the company at the competent state authority. .
The transfer of ownership of assets contributed as capital is not subject to registration fee;
b) For assets without ownership registration, the capital contribution must be made by delivery and receipt of the property to be contributed as capital certified in writing.
The delivery and receipt minutes must clearly state the name and address of the company's head office; full name, permanent address, number of Citizen card, ID card, Passport or other legal personal identification, number of establishment decision or registration of the capital contributor; type of asset and number of units of asset contributed as capital the total value of assets contributed as capital and the proportion of the total value of such assets in the company's charter capital; delivery date; signature of the capital contributor or the authorized representative of the capital contributor and the legal representative of the company;
c) Shares or contributed capital shares with assets other than VND, convertible foreign currencies, gold are considered to be paid off only when the legal ownership of assets contributed as capital has transferred to the company. .
Particular attention should be paid to specific cases:
2. The property used in the business activities of the private enterprise owner is not required to go through the procedures for transferring ownership rights to the enterprise.
3. Payment for all activities of buying, selling, transferring shares and contributed capital and receiving dividends from foreign investors must be made through the investor's capital account opened at a bank in Vietnam. Male, except for payment by property.
V.a.t tax #
Application of Clause 7, Article 5 of Circular 219/2013 / TT-BTC: Business establishments are not required to declare and pay value-added tax when Contribute capital with assets to establish a business.
The capital contribution must comply with the procedures specified at this Point as guided above.
Capital contribution by property is not required to be issued with an invoice under the guidance in Official Letter No. 3422 / TCT-CS dated September 06, 09 of the General Department of Taxation.
Corporate income tax #
Differences for asset revaluation upon capital contribution are calculated into other income for corporate income tax calculation according to the following instructions:
14. Difference due to reassessment of assets according to the provisions of law for capital contribution, to transfer of assets upon division, separation, consolidation, merger or conversion of enterprises (except for the case of equitization, reorganization and renewal of enterprises with 100% state capital), specifically determined as follows:
a) Increase or decrease difference due to reassessment of assets is the difference between the revaluation value and the residual value of assets recorded in accounting books and lump-sum calculation to other income (for difference increase) or decrease other income (for reduced difference) in the tax period when determining taxable income of corporate income tax at the enterprise with revalued assets.
b) The difference increases or decreases due to reassessment of land use right value to: contribute capital (to which the enterprise receiving the value of land use rights shall be gradually distributed the land value into deductible expenses), transferred when dividing , splitting, consolidating, merging, transforming type of business, contributing capital to investment projects to build houses and infrastructure for sale, for lump-sum sale to other income (for increased difference) or deduction of revenue other income (for reduced difference) in the tax period when determining taxable income of enterprise income at enterprises having reassessed land use rights.
Particularly, the increased difference due to reassessment of land use right value to contribute capital to enterprises to form fixed assets for production and business, enterprises receiving the value of land use rights are not amortized and must not be amortized. to gradually allocate land value to deductible expenses, this difference shall be gradually calculated into other income of re-evaluated enterprises with land use rights for a period not exceeding 10 years starting from the year of value of rights. land use is contributed as capital. Enterprises must notify the number of years they will allocate to other income when submitting dossiers of CIT finalization of the year they start to declare this income (the year when land use right value is reassessed capital contribution).
In case the enterprise continues to transfer contributed capital with the value of the land use right after contributing capital (including the case of transferring contributed capital 10 years before the time limit), the income from the transfer of contributed capital is equal to the value of land use rights to calculate and declare and pay tax according to real estate transfer income.