How to calculate taxable income from securities transfer in Vietnam?

Are incomes from securities transfer taxable in Vietnam?

According to Clause 4, Article 2 of Circular 111/2013/TT-BTC, amended by Article 4 of Circular 25/2018/TT-BTC, the taxable income for individuals from capital transfers includes:

Taxable Income

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4. Income from Capital Transfers

Income from capital transfers encompasses the income received by individuals, including:

a) Income from contributions of capital in limited liability companies (including single-member limited liability companies), partnerships, business cooperation contracts, cooperatives, credit funds, economic organizations, and other organizations.

b) Income from securities transfer, including income from the transfer of shares, share purchase rights, bonds, promissory notes, fund certificates, and other securities as stipulated in Clause 1, Article 6 of the Securities Law. Income from the transfer of shares by individuals in joint-stock companies as stipulated in Clause 2, Article 6 of the Securities Law and Article 120 of the Enterprise Law.

c) Income from capital transfers under other forms.

Thus, based on the above regulations, income from individual securities transfer is subject to personal income tax.

Are incomes from securities transfer taxable in Vietnam? (Image from the Internet)

How to calculate taxable income from securities transfer in Vietnam?

According to Points a, b, Clause 2, Article 11 of Circular 111/2013/TT-BTC, amended by Article 16 of Circular 92/2015/TT-BTC, the regulations are as follows:

Basis for Tax Calculation on Investment Income

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2. For Income from securities transfer

The basis for tax calculation for securities transfer is taxable income and tax rates.

a) Taxable Income

Taxable income from securities transfer is determined as the transfer price of the securities per transaction.

a.1) The transfer price of securities is determined as follows:

a.1.1) For publicly traded securities on the stock exchange, the transfer price is the execution price at the stock exchange. The execution price is the price derived from the settlement results or the price formed from negotiated transactions at the stock exchange.

a.1.2) For securities not falling under the above case, the transfer price is the price stated in the transfer contract or the actual transfer price or the price recorded in the accounting books of the entity holding the securities at the time of the latest financial report as stipulated by the accounting law prior to the transfer date.

In case the transfer contract does not specify the sale price or the sale price on the contract is not consistent with market prices, the tax authority has the right to determine the sale price according to tax management laws.

a.2) The purchase price of securities is determined as follows:

a.2.1) For publicly traded securities on the stock exchange, the purchase price is the execution price at the stock exchange. The execution price is the price derived from the settlement results or the price formed from negotiated transactions at the stock exchange.

a.2.2) For publicly traded securities not transacted on the stock exchange but only through the ownership transfer system of the Securities Depository Center, the purchase price is the price stated in the securities transfer contract.

a.2.3) For securities purchased through auctions, the purchase price is the price recorded in the auction result notice and the payment receipt.

a.2.4) For securities not falling under the above cases, the purchase price is the actual purchase price recorded in the transfer receipt contract or the price according to the accounting books of the entity holding the securities at the closest time prior to the purchase.

In case the transfer contract does not specify the purchase price or the purchase price on the contract is not consistent with market prices, the tax authority has the right to determine the purchase price according to tax management laws.

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taxable income from stock transactions is determined as the transfer price of the securities per transaction.

What are regulations on personal income tax rate deduction before securities transfer in Vietnam?

According to Point đ, Clause 1, Article 25 of Circular 111/2013/TT-BTC which stipulates tax deduction and tax deduction documents, the regulations are as follows:

Tax Deduction and Tax Deduction Documents

1. Tax Deduction

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dd) Income from securities transfer

All cases of securities transfer must deduct tax at a rate of 0.1% of the transfer price before payment to the transferring party. Specifically, the tax deduction is implemented as follows:

đ.1) For securities traded on the stock exchange:

đ.1.1) Securities companies, commercial banks where individuals have their securities depository accounts are responsible for deducting personal income tax at a rate of 0.1% of the transfer price before payment to the individual. The deducted tax is determined as guided in Point b.2, Clause 2, Article 11 of this Circular.

đ.1.2) Fund management companies where individuals entrust their securities investment portfolios are responsible for deducting personal income tax at a rate of 0.1% of the transfer price of the securities entrusted for the investment portfolio according to the allocation table sent by the company to the custodian bank where the depository account is opened.

đ.2) For securities transfers not through the stock exchange trading system:

đ.2.1) For publicly traded securities registered centrally at the Securities Depository Center:

Securities companies, commercial banks where individuals have their securities depository accounts will deduct personal income tax at a rate of 0.1% of the transfer price before completing ownership transfer procedures at the Securities Depository Center.

đ.2.2) For securities of joint-stock companies not being public companies but issuers of securities authorized securities companies to manage the list of shareholders:

The authorized securities companies managing the list of shareholders will deduct personal income tax at a rate of 0.1% of the transfer price before completing ownership transfer procedures.

Individuals transferring securities must present the transfer contract to the securities company when handling ownership transfer procedures.

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2. Tax Deduction Documents

a) Organizations and individuals paying income after tax deductions as guided in Clause 1, this Article, must issue tax deduction documents as requested by the deducted individual. In cases where an individual authorizes tax finalization, no tax deduction documents are issued.

Additionally, Official Dispatch 53415/CTHN-TTHT of 2022 provides guidance as follows:

In cases where taxpayers need confirmation of tax obligations with the state budget, they shall follow the procedures as guided in Clause 1, Article 70 of Circular 80/2021/TT-BTC of the Ministry of Finance.

In cases where individuals open securities depository accounts at Companies, the Company is responsible for deducting personal income tax at a rate of 0.1% of the transfer price before payment. In which the taxable income from securities transfers is determined as the transfer price of the securities per transaction as guided in Article 16 of Circular 92/2015/TT-BTC of the Ministry of Finance.

The Company issues tax deduction documents as requested by the deducted individual as stipulated in Clause 2, Article 25 of Circular 111/2013/TT-BTC. Item 14 “Income Amount” on the tax deduction document, the paying organization records the type of income as income from securities transfers.

Therefore, all cases of securities transfer must deduct tax at a rate of 0.1% of the transfer price before payment to the transferring party. Simultaneously, the entity paying the income that has deducted tax must issue tax deduction documents as requested by the deducted individual.