Is the employee who receives stock bonuses required to declare personal income tax in Vietnam?

Is the employee who receives stock bonuses required to declare personal income tax in Vietnam?

According to Clause 11, Article 26 of Circular 111/2013/TT-BTC regarding tax declaration and settlement as follows:

Tax Declaration and Settlement

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11. Tax declaration for income from wages and salaries regarding income from stock bonuses.

Individuals receiving stock bonuses from their employer are not required to pay tax on income from wages and salaries at the time of award. When individuals transfer stock bonuses, they must declare tax on income from stock transfers and income from wages and salaries.

Based on Point d, Clause 5, Article 7 of Decree 126/2020/ND-CP on the responsibility for declaring and paying personal income tax for the transfer of stock bonuses by employees as follows:

Tax Declaration File

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5. Organizations and individuals declaring and paying tax on behalf of taxpayers must fully comply with tax declaration and payment regulations as prescribed for taxpayers under this Decree, including:

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Organizations declaring and paying tax on behalf of individuals receiving dividends in securities; individuals who are existing shareholders receiving stock bonuses; individuals whose increased capital contribution is recorded due to an increase in capital from profits; individuals contributing capital with real estate, capital contribution, securities. The timing of declaring and paying tax on behalf occurs when an individual transfers the same type of securities, transfers capital, or withdraws capital.

d.1) For individuals receiving dividends in securities; individuals who are existing shareholders receiving stock bonuses, organizations are responsible for declaring and paying tax on behalf of individuals for income from capital investment when individuals transfer the same type of securities as follows:

For securities trading through the stock exchange system, the organization declaring and paying tax on behalf is the securities company, the commercial bank where the individual opens a depository account, the fund management company where the individual entrusts their investment portfolio.

For securities not traded through the stock exchange system, the organization declaring and paying tax on behalf is as follows: securities of public companies registered centrally at the Securities Depository Center, the organization declaring and paying tax on behalf is the securities company, the commercial bank where the individual opens a securities depository account. For securities of joint-stock companies that are not yet public companies but the issuing organization authorizes a securities company to manage the shareholder list, the organization declaring and paying tax on behalf is the authorized securities company managing the shareholder list; securities not falling under the cases specified in this paragraph, the organization declaring and paying tax on behalf is the issuing organization.

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Additionally, Article 43 of Decree 126/2020/ND-CP is supplemented by Clause 8, Article 1 of Decree 91/2022/ND-CP as follows:

Transitional Provisions

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4. The provisions at Point d.1, Clause 5, Article 7 of Decree No. 126/2020/ND-CP are implemented from January 1, 2023. In cases where individuals receiving dividends in securities, existing shareholders receiving stock bonuses, recorded into the securities account of the investor from December 31, 2022, or earlier, and have not been declared and paid by securities companies, commercial banks where the individual opens a depository account, fund management companies where the individual entrusts their investment portfolio, the issuing organization pays taxes on behalf, individuals shall self-declare, and pay personal income tax as per the law on Personal Income Tax and will not be administratively penalized for late filing of tax returns, nor subjected to late payment interest (if any) as per the regulation in Clause 11, Article 16 of the Law on Tax Administration from December 5, 2020, to December 31, 2022.

Thus, according to the regulations mentioned, employees receiving stock bonuses must declare and pay personal income tax when income from the transfer of such bonus stocks arises. The responsibility for tax declaration and payment lies with the awarding enterprise.

Is the employee who receives stock bonuses required to declare personal income tax in Vietnam? (Image from Internet)

Which income is exempt from personal income tax in Vietnam?

According to Article 4 of the Personal Income Tax Law 2007 (amended by Clause 2, Article 1 of the Amended Personal Income Tax Law 2012, supplemented by Clause 3, Article 2 of the Law Amending Tax Laws 2014) stipulating income exempt from personal tax as follows:

- Income from the transfer of real estate between spouses; biological parents and biological children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; siblings.

- Income from transferring residential houses, homestead land use rights, and assets attached to homestead land in cases where the individual possesses only one residential house, one homestead land.

- Income from the value of land use rights allocated by the State to individuals.

- Income from inheritance, gifts being real estate between spouses; biological parents and biological children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; siblings.

- Income of households and individuals directly engaged in agricultural production, forestry, salt production, aquaculture, and fishing without processing into other products or through ordinary processing methods.

- Income from the conversion of farmland allocated by the State to households and individuals for production.

- Income from interest on deposits at credit institutions, interest from life insurance contracts.

- Income from remittances.

- Portion of wages for night work, overtime paid higher than daytime, and in-time wages as prescribed by law.

- Retirement pensions paid by the Social Insurance Fund; retirement pensions paid monthly by voluntary pension funds.

- Income from scholarships, including:

+ Scholarships received from the state budget;

+ Scholarships received from organizations within and outside the country under the academic support program of those organizations.

- Income from compensation of life insurance contracts, non-life insurance, workers' compensation, state compensation, and other compensations as prescribed by law.

- Income received from charity funds established or recognized by competent state agencies, operating with charity, humanitarian, and non-profit purposes.

- Income received from foreign aid for charitable, humanitarian purposes in governmental and non-governmental forms approved by competent state agencies.

- Income from wages and salaries of Vietnamese crew members working for foreign shipping companies or Vietnamese shipping companies engaged in international transportation.

- Income of individuals who are ship owners, individuals with ship use rights, and individuals working on ships from activities providing goods and services directly serving offshore fishing activities.

What are regulations on the personal income tax period in Vietnam?

According to Article 7 of the Personal Income Tax Law 2007, amended by Clause 3, Article 1 of the Amended Personal Income Tax Law 2012, the tax period is defined as follows:

- The assessment period for resident individuals is prescribed as follows:

+ The tax period is annual for income from business; income from wages and salaries.

+ The tax period is per occurrence of income for income from capital investment; income from capital transfer, excluding income from securities transfer; real estate transfer income; winnings; royalties; franchise income; inheritance; gifts.

+ The tax period is per transaction or annually for income from securities transfers.

- The assessment period for non-resident individuals is per occurrence of income applicable to all taxable income.