Are dividends paid in bonds subject to personal income tax in Vietnam?

Are dividends paid in bonds subject to personal income tax in Vietnam?

Pursuant to point g, clause 3, Article 2 of Circular 111/2013/TT-BTC, regulations on taxable income from capital investment are as follows:

Taxable Income

As stipulated in Article 3 of the Personal Income Tax Law and Article 3 of Decree No. 65/2013/ND-CP, taxable personal income includes:

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3. Income from Capital Investment

Income from capital investment is the income an individual receives in the forms of:

a) Interest received from loans to organizations, businesses, households, individuals in business, groups of individuals in business under loan contracts or agreements, excluding interest on deposits received from credit institutions, foreign bank branches as guided in point g.1, point g, clause 1, Article 3 of this Circular.

b) Dividends received from capital contributions to purchase shares.

c) Profits received from participation in capital contributions to limited liability companies, partnerships, cooperatives, joint ventures, business cooperation contracts, and other forms of business under the provisions of the Law on Enterprises and the Law on Cooperatives; profits received from participation in capital contributions to the establishment of credit institutions under the Law on Credit Institutions; contributions to securities investment funds and other investment funds established and operating under legal regulations.

Profits of private enterprises, one-member limited liability companies owned by individuals are not counted as taxable income from capital investment.

d) The additional value of contributed capital when dissolving enterprises, changing operational models, splitting, separating, merging, consolidating enterprises or withdrawing capital.

dd) Income received from bond interest, treasury bills, and other valuable papers issued by domestic organizations, except for income as guided in point g.1 and g.3, point g, clause 1, Article 3 of this Circular.

e) Income received from capital investment in other forms, including cases of capital investment through assets, reputation, land use rights, inventions, and patents.

g) Income from dividends paid in bonds, income from profit recorded as increased capital.

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According to the above regulations, it can be seen that income from dividends paid in bonds is subject to personal income tax.

Are dividends paid in bonds subject to personal income tax in Vietnam? (Image from Internet)

When is income from capital investment determined for tax purposes in Vietnam?

According to clause 3, Article 10 of Circular 111/2013/TT-BTC, the time to determine taxable income from capital investment is when organizations or individuals pay income to the taxpayer.

In addition, the timing for determining taxable income in some other cases is regulated as follows:

- For income from increased contributed capital value as guided in point d, clause 3, Article 2 of Circular 111/2013/TT-BTC, the time to determine income from capital investment is when the individual actually receives income upon dissolution of an enterprise, change of business model, split, separation, merger, or consolidation of an enterprise, or capital withdrawal.

- For income from profits recorded as increased capital as guided in point g, clause 3, Article 2 of Circular 111/2013/TT-BTC, the time to determine income from capital investment is when the individual transfers capital or withdraws capital.

- For income from dividends paid in bonds as guided in point g, clause 3, Article 2 of Circular 111/2013/TT-BTC, the timing for determining income from capital investment is when the individual transfers shares.

- In cases where individuals receive income from overseas capital investment in any form, the time to determine taxable income is when the individual receives the income.

What are regulations on PIT refund according to Circular 111?

According to Article 28 of Circular 111/2013/TT-BTC, individuals are eligible for personal income tax refund in compliance with the following provisions:

- Personal income tax refund applies to individuals who have registered and have a tax code at the time of filing the tax finalization dossier.

- For individuals who have authorized tax finalization to organizations or individuals paying income to finalize on their behalf, the refund is carried out through these income-paying organizations or individuals. The income-paying organization or individual offsets overpaid and underpaid taxes of individuals. After offsetting, if there remains an overpayment, it can be offset against the following period or refunded if a refund request is submitted.

- For individuals who declare directly with the tax authority, they can choose to receive a tax refund or offset against the following period at the same tax agency.

- In cases where individuals have incurred a personal income tax refund but delay in submitting the tax finalization declaration as prescribed, no penalties for administrative violations for late tax finalization submission shall be applied.