Following Part 3 specializing on incomes from capital investment, Part 4 on incomes from real estate transfer, and Part 5, 6, 7 on incomes from wages and remunerations, this part of the series on Personal Income Tax for Foreigners will focus on incomes from capital transfer.
i. Types of incomes from capital transfer
Incomes from capital transfer are personal income in the form of:
– Profits from capital contributions to limited liability companies (including single-member limited liability companies), partnerships, cooperatives, business cooperation contracts, people’s credit funds, economic organizations, and other organizations.
– Income from securities transfer includes income from transfer of stocks, the right to buy stocks, bonds, treasury bills, fund certificates and other securities according to Clause 1 Article 6 of the Law on Securities. Income from transfer of stocks by individuals in a joint-stock company is specified in Clause 2 Article 6 of the Law on Securities and Article 120 of the Law on Enterprises.
– Incomes from other forms of capital transfer.
ii. Tax rate
– In terms of capital contribution transfer, the tax rate will be as follows:
For residents, the rate of personal income tax on the income from transferring contributed capital is 20% according to the whole income tax table.
For non-residents, the rate of personal income tax on the income from transferring contributed capital is 0,1%.
– In terms of security transfer, securities transferee shall pay 0.1% tax on the price of each transfer.
iii. Tax calculation time
– For residents, tax calculation time will be as follows:
+ Taxable income shall be calculated when the capital transfer contract takes effect. Where making contribution from another capital contribution, the taxable income from transferring capital shall be calculated when the person transfers or withdraws capital.
+ Time to calculate assessable income from transferring securities:
~ For securities of a public company that are traded at the Stock Exchange, it is the time the taxpayer receives the income from securities transfer.
~ For securities of a public company that are not traded at the Stock Exchange but only transferred via the system of the Vietnam Securities Depository, it is the time the ownership is transferred at the Vietnam Securities Depository.
~ For the securities that do not fall into the cases above, it is the time the securities transfer contract takes effect.
~ When making capital contribution by securities without paying tax when making capital contribution, the time to calculate income from transferring securities to make capital contribution is the time the person transfers, withdraws capital.
– For non-residents:
+ The assessable income from transferring contributed capital earned by a non-resident shall be calculated when the capital transfer contract takes effect.
+ The time to calculate the assessable income from transferring securities earned by a non-resident is similar to that of a resident as guided in Point c Clause 2 Article 11 of the Circular No. 111/2013/TT-BTC.
iv. Relevant laws and regulations
The following pieces of legislation, regulations, and documents are the grounds mainly governing the tax imposed on incomes from capital investment.
– The 2007 Law on Personal Income Tax.
– Circular No. 111/2013/TT-BTC on the implementation of the law on personal income tax, the law on the amendments to the law on personal income tax, and the Government’s Decree No. 65/2013/ND-CP elaborating a number of articles of the law on personal income tax and the law on the amendments to the law on personal income tax.
– Circular No. 92/2015/TT-BTC on guidelines for VAT and personal income tax incurred by residents doing business, amendments to some articles on personal income tax of the Law No. 71/2014/QH13 on the amendments to tax laws, and the Government’s Decree No. 12/2015/ND-CP dated February 12, 2015.
– Circular No. 156/2013/TT-BTC guidance on some articles of the law on tax administration, the law on the amendments to the law on tax administration, and the Government’s Decree No. 83/2013/ND-CP.