What is the Form 24/KK-TNCN: Personal income tax declaration for individuals receiving dividends in shares in Vietnam?

What is the Form 24/KK-TNCN: Personal income tax declaration for individuals receiving dividends in shares in Vietnam?

The personal income tax declaration form for individuals receiving dividends in shares, bonus shares, and profit recorded as increased capital is currently Form 24/KK-TNCN issued together with Circular 20/2010/TT-BTC.

Form 24/KK-TNCN is structured as follows:

Download Form 24/KK-TNCN: Personal Income Tax Declaration for Individuals Receiving Dividends in shares, Bonus Shares, Profit Recorded as Increased Capital

What is the Form 24/KK-TNCN: Personal income tax declaration for individuals receiving dividends in shares in Vietnam? (Image from the Internet)

Is income from dividends in shares considered capital investment income in Vietnam?

According to the provision at point g, clause 3, Article 2 of Circular 111/2013/TT-BTC, income from capital investment is defined as follows:

Taxable Income Items

According to Article 3 of the Personal Income Tax Law and Article 3 of Decree No. 65/2013/ND-CP, taxable personal income includes:

...

3. Income from capital investment

Income from capital investment is the income that individuals receive in the following forms:

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

b) Dividends received from capital contribution for stock purchase.

c) Profit received from capital contribution participation in a limited liability company, partnership, cooperative, joint venture, business cooperation contract, and other business forms as stipulated by the Enterprise Law and Cooperative Law; profit received from participation in establishing credit institutions as regulated by the Law on Credit Institutions; capital contribution to Securities Investment Funds and other investment funds established and operate according to legal regulations.

The income from capital investment does not include profit from private enterprises, one-member limited liability companies owned by individuals.

d) The additional portion of capital contribution value received when dissolving a business, converting the operational model, dividing, splitting, merging, consolidating a business, or when withdrawing capital.

dd) Income received from bonds, debentures, and other valuable papers issued by domestic organizations, excluding income as guided in sub-point g.1 and g.3, point g, clause 1, Article 3 of this Circular.

e) Other forms of income received from capital investment, including capital investment in the form of assets, reputation, land use rights, inventions, patents.

g) Income from dividends paid in shares, income from profit recorded as increased capital.

...

As per the above regulations, income from dividends in shares is one form of income from capital investment.

How to calculate personal income tax on capital investment income for Vietnamese residents?

According to the provision in Article 10 of Circular 111/2013/TT-BTC, the basis for calculating personal income tax on the capital investment income of residents is as follows:

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

Where taxable income and tax rate are determined as follows:

(1) Taxable Income

Taxable income from capital investment is the taxable income that individuals receive as guided in clause 3, Article 2 of Circular 111/2013/TT-BTC.

(2) Tax Rate

The tax rate for income from capital investment is applied according to the uniform tax schedule with a tax rate of 5%.

(3) Time of Taxable Income Identification

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

Particularly, the time of identifying taxable income for some specific cases is as follows:

- For income from the additional value of capital contribution, the time of identifying income from capital investment is when the individual actually receives income upon business dissolution, model conversion, division, separation, merger, consolidation, or capital withdrawal.

- For income from profit recorded as increased capital as guided, the time of identifying income from capital investment is when the individual transfers or withdraws capital.

- For income from dividends paid in shares, the time of identifying income from capital investment is when the individual transfers shares.

- In cases where individuals receive income from capital investments abroad in any form, the time of identifying taxable income is when the individual receives the income.

(4) Tax Calculation Method

The formula to calculate personal income tax on income from capital investment is as follows:

Personal Income Tax Payable = Taxable Income x 5% Tax Rate