Is the income from securities transfer at par value subject to personal Income tax in Vietnam?

Is the income from securities transfer at par value subject to personal Income tax in Vietnam?

Pursuant to the provisions at point b, clause 4, Article 2 of Circular 111/2013/TT-BTC (amended by Article 4 of Circular 25/2018/TT-BTC) stipulating taxable income from the transfer of securities as follows:

Taxable Income

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

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4. Income from Capital Transfer

Income from capital transfer is the personal income received including:

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b. Income from the transfer of securities*, includes: income from the securities transfer, share purchase rights, bonds, bills, fund certificates, and other securities as stipulated in clause 1, Article 6 of the Securities Law.* Income from the securities transfer by individuals in joint-stock companies as stipulated in clause 2, Article 6 of the Securities Law and Article 120 of the Enterprise Law.

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Additionally, according to point b, clause 2, Article 11 of Circular 111/2013/TT-BTC (amended by Article 16 of Circular 92/2015/TT-BTC), it is stipulated that resident individuals transferring securities shall pay tax at the rate of 0.1% on the transfer price of securities per transaction.

According to the above regulations, for the securities transfer, the personal income tax is determined as 0.1% on the transfer price per transaction and not on the difference between the selling price and the purchase price.

Therefore, for the case of a resident individual transferring shares at par value, income tax must still be paid at the tax rate of 0.1% on the transfer price of the shares per transaction.

Is the income from securities transfer at par value subject to personal Income tax in Vietnam? (Image from the Internet)

How to determine taxable income from the securities transfer at par value in Vietnam?

Taxable income from the securities transfer is regulated at point a, clause 2, Article 11 of Circular 111/2013/TT-BTC (amended by Article 16 of Circular 92/2015/TT-BTC) as follows:

Tax Base for Income from Capital Transfer

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2. For Income from the Transfer of Securities

The tax base for the transfer of securities activities is taxable income and tax rate.

a) Taxable Income

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

a.1) Securities Transfer Price is Determined as Follows:

a.1.1) For the securities of public companies traded on the Stock Exchange, the transfer price is the execution price at the Stock Exchange. The execution price is the price of the securities determined from matching results or prices formed from negotiated transactions at the Stock Exchange.

a.1.2) For securities not falling into the above cases, the transfer price is that recorded on the transfer agreement or actual transfer price or book price of the unit holding the securities at the time of preparing the latest financial statements in accordance with the accounting regulations before the transfer date.

b) Tax Rate and Tax Calculation:

Individuals transferring securities shall pay tax at the rate of 0.1% on the transfer price per transaction.

Tax Calculation:

Personal Income Tax Payable = Securities Transfer Price per transaction x Tax Rate 0.1%

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According to the above regulations, taxable income from the securities transfer is determined as the transfer price per transaction.

The transfer price of shares is determined as follows:

- For the shares of public companies traded on the Stock Exchange, the transfer price is the execution price at the Stock Exchange.

The execution price is the price of the shares determined from matching results or prices formed from negotiated transactions at the Stock Exchange.

- For shares not falling into the above cases, the transfer price is that recorded on the transfer agreement or actual transfer price or book price of the unit holding the shares at the time of preparing the latest financial statements according to the accounting regulations before the transfer date.

When is the time to calculate the assessable income from securities transfer at par value in Vietnam?

The timing for determining personal income tax on the securities transfer is based on point c, clause 2, Article 11 of Circular 111/2013/TT-BTC as follows:

- For the shares of public companies traded on the Stock Exchange, it is the time when the taxpayer receives income from the transfer of securities.

- For the shares of public companies not traded on the Stock Exchange but only transferring ownership through the securities depository system, it is the time of ownership transfer at the securities depository center.

- For shares not falling into the above cases, it is the time when the share transfer contract takes effect.

- For cases of contributing capital by shares where tax is not yet paid upon contribution, the timing of determining income from the securities transfer due to capital contribution is the time the individual transfers capital or withdraws capital.