Time of Determining Taxable Income from Personal Income Tax from Capital Investment in Vietnam

Time of Determining Taxable Income from Personal Income Tax from Capital Investment in Vietnam

Based on Clause 3, Article 3 of the Law on Personal Income Tax 2007, taxable income from capital investment includes:

- Interest from loans;

- Dividends;

- Income from capital investment in other forms, excluding income from government bonds interest.

According to Article 12 of the Law on Personal Income Tax 2007:

Taxable Income from Capital Investment

1. Taxable income from capital investment is the total income from capital investment as specified in Clause 3, Article 3 of this Law received by the taxpayer during the tax period.

2. The time to determine taxable income from capital investment is the time the organization or individual pays income to the taxpayer or the time the taxpayer receives the income.

Thus, the time to determine taxable personal income from capital investment is the time the organization or individual pays income to the taxpayer or the time the taxpayer receives the income.

Time of Determining Taxable Income from Personal Income Tax from Capital Investment in Vietnam (Image from the Internet)

Regulations on the Tax Period for Personal Income Tax for Income from Capital Investment in Vietnam

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

Tax Period

1. The tax period for resident individuals is as follows:

a) The annual tax period applies to income from business; income from salaries and wages;

b) The tax period for each occurrence of income applies to income from capital investment; income from capital transfer, excluding income from securities transfer; income from real estate transfer; lottery winnings; royalties; franchising; inheritance; gifts;

c) The tax period for each transfer or annually for income from securities transfer.

2. The tax period for non-resident individuals is calculated for each occurrence of income for all taxable income.

Thus, the personal income tax period for income from capital investment is the tax period for each occurrence of income.

For non-resident individuals, the personal income tax period for income from capital investment is calculated for each occurrence of income.

Personal Income Tax Rate for Income from Capital Investment in Vietnam

According to Clause 2, Article 23 of the Law on Personal Income Tax 2007, amended by Clause 7, Article 2 of the Amended Tax Laws 2014:

Thus, the personal income tax rate for income from capital investment is applied according to the Full Tariff with a rate of 5%.

Basis for Calculating Personal Income Tax for Income from Capital Investment in Vietnam

According to Article 10 of Circular 111/2013/TT-BTC, the basis for calculating personal income tax for income from capital investment is taxable income and tax rate.

Including:

- Taxable income

Taxable income from capital investment is the taxable income received by the individual as guided in Clause 3, Article 2 of Circular 111/2013/TT-BTC.

- The tax rate for income from capital investment is applied according to the Full Tariff with a rate of 5%.

- Time to determine taxable income

The time to determine taxable income for income from capital investment is the time the organization or individual pays income to the taxpayer.

Separate time to determine taxable income for some cases is as follows:

+ For income from the increased value of contributed capital as guided at Point d, Clause 3, Article 2 of Circular 111/2013/TT-BTC, the time to determine income from capital investment is the time the individual receives the income when dissolving the enterprise, changing business models, dividing, separating, merging, consolidating enterprises, or withdrawing capital.

+ For income from dividends added to capital as guided at Point g, Clause 3, Article 2 of Circular 111/2013/TT-BTC, the time to determine income from capital investment is the time the individual transfers shares or withdraws capital.

+ For income from dividends paid by shares as guided at Point g, Clause 3, Article 2 of Circular 111/2013/TT-BTC, the time to determine income from capital investment is the time the individual transfers shares.

+ In case the individual receives income from foreign capital investment in any form, the time to determine taxable income is the time the individual receives the income.

* How to calculate the tax

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