Is the income from dividends taxable in Vietnam?

Is the income from dividends taxable in Vietnam?

According to point b, clause 3, Article 2 of Circular 111/2013/TT-BTC stipulating taxable personal income, the provisions are as follows:

Taxable Incomes

According to Article 3 of the Personal Income Tax Law and Article 3 of Decree 65/2013/ND-CP, taxable personal incomes include:

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3. Income from capital investment

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

a) Interest received from lending to organizations, enterprises, households, business individuals, business groups under a loan contract or agreement, excluding interest received from deposits at credit institutions, foreign bank branches as instructed in item g.1, point g, clause 1, Article 3 of this Circular.

b) Dividends received from capital contribution for share purchase.

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Thus, income from dividends from capital contributions for share purchase is considered income from capital investment and is subject to personal income tax.

Therefore, individuals who receive income from dividends must pay personal income tax.

Is the income from dividends taxable in Vietnam? (Image from the Internet)

What is the tax rate and calculation of personal income tax from dividends in Vietnam?

According to Article 10 of Circular 111/2013/TT-BTC, the basis for tax calculation on income from capital investment is as follows:

Basis for Tax Calculation on Income from Capital Investment

The basis for tax calculation on income from capital investment is taxable income and tax rate.

1. Taxable Income

Taxable income from capital investment is the taxable income that an individual receives as per the instructions in clause 3, Article 2 of this Circular.

2. The tax rate for income from capital investment is applied according to the flat tax rate schedule, which is 5%.

3. Timing for determining taxable income

The timing for determining taxable income from capital investment is when the organization or individual pays income to the taxpayer.

Specifically, the timing for determining taxable income in certain cases is as follows:

a) For income from additional capital contribution value as per the instructions in point d, clause 3, Article 2 of this Circular, the timing for determining income from capital investment is when the individual actually receives the income upon dissolution of the enterprise, change in the business model, division, splitting, merger, consolidation, or capital withdrawal.

b) For income from increased recorded capital according to instructions in point g, clause 3, Article 2 of this Circular, the timing for determining income from capital investment is when the individual transfers capital or withdraws capital.

c) For income from dividends paid by shares as per the instructions in point g, clause 3, Article 2 of this Circular, the timing for determining income from capital investment is when the individual transfers shares.

d) In the case of income from capital investment abroad under any form, the timing for determining taxable income is when the individual receives the income.

4. Tax Calculation Method

Personal income tax payable = Taxable income × Tax rate 5%

Accordingly:

* The tax rate for personal income tax on dividends, as per the flat tax rate schedule, is 5%.

* The method to calculate personal income tax on dividends is as follows:

How to declare personal income tax from dividends paid by shares in Vietnam?

According to clause 9, Article 26 of Circular 111/2013/TT-BTC, the declaration of personal income tax on dividends paid by shares is as follows:

Tax Declaration and Finalization

Organizations and individuals who pay income subject to personal income tax and individuals who receive income subject to personal income tax must declare and finalize tax according to procedures and dossiers stipulated in tax administration guidance documents. The principles for tax declaration for certain specific cases are as follows:

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9. Tax Declaration on income from capital investment in the case of receiving dividends in shares, increased recorded capital

Individuals receiving dividends in shares or increased recorded capital do not have to declare and pay tax on capital investment when receiving. However, upon transferring capital, withdrawing capital, or dissolving the enterprise, individuals must declare and pay personal income tax on income from capital transfer and capital investment.

10. Tax Declaration on income from capital transfer, securities transfer, and real estate transfer in the case of contributing capital by capital, securities, and real estate.

Individuals who contribute capital by capital, securities, or real estate do not have to declare and pay tax on capital transfer upon contribution. However, upon transferring capital, withdrawing capital, or dissolving the enterprise, individuals must declare and pay tax on income from capital transfer and real estate transfer upon contributing capital and income from capital transfer, real estate transfer upon transfer.

11. Tax Declaration on wages and salaries in the case of receiving bonuses by shares.

Individuals receiving bonuses in shares from the employing unit do not have to pay tax on wages and salaries. Upon transferring bonus shares, individuals must declare tax on income from share transfer and income from wages and salaries.

Therefore, individuals receiving dividends in shares do not have to declare and pay tax on capital investment when receiving.

Upon transferring capital, withdrawing capital, or dissolving the enterprise, individuals must declare and pay personal income tax on income from capital transfer and capital investment.