Enterprises have the right to contribute capital to other enterprises with land use rights and must fully keep original records of asset formation as well as make minutes of property handover.

Legal grounds:

• Decree No. 123/2020/ND-CP;
• Circular No. 219/2013/TT-BTC;
• Circular No. 39/2014/TT-BTC.

We get the following questions:

My company will contribute capital to establish another company with land use rights. I want to ask if I need to issue an invoice when I contribute capital with land? And how much is the value added tax?

According to the provisions of the Enterprise Law 2020, individuals and organizations have the right to contribute capital to establish an enterprise with money and other assets such as land use rights, intellectual property, goods, etc.

In principle, when selling goods, enterprises must issue invoices to recognize revenue, which is also a basis for showing the transfer of property ownership to the buyer. So, when transferring ownership of assets due to capital contribution, It must to issue an invoice?

Pursuant to Clause 1, Article 3 of Circular No. 39/2014/TT-BTC as follows:

Article 3. Type and form of invoices

1. Invoice is a document made by a seller, recording information on sale of goods or provision of services in accordance with law.

Pursuant to Point e, Clause 3, Article 13 of Decree No. 123/2020/ND-CP as follows:

Article 13. Application of e-invoices when selling goods and providing services

3. Regulations on application of e-invoices, ex-warehousing-cum-internal shipping notes, and delivery notes sent to agents for sale in some specific cases at the request of management are as follows:

e) In case of capital contribution with assets of an organization or individual doing business in Vietnam to establish an enterprise, it is not required to issue an invoice but use the documents of the minutes of capital contribution certification, minutes of asset handover, minutes of asset valuation, together with a set of documents on the origin of assets.

Pursuant to Point a, Clause 7, Article 5 of Circular No. 219/2013/TT-BTC as follows:

Article 5. Cases not required to declare, calculate and pay VAT

7. Other cases:

Business are not required to declare and pay tax in the following cases:

a) Contributing capital with assets to establish an enterprise. Assets contributed as capital to the enterprise must include: minutes of capital contribution for production and business, joint venture and association contracts; minutes of asset valuation of the Council for the delivery and receipt of capital contributions of the capital contributors (or valuation documents of organizations with valuation function as prescribed by law), enclosed with a set of documents on the origin of assets.

According to the above provisions:

• Invoice is a document to record sales and service provision.
• While contributing capital to establish a business is not a sale or service provision.

Therefore, when enterprises contribute capital with assets such as land use rights, intellectual property, or capital contribution by goods, they do not have to issue invoices and do not have to pay value added tax.