What is the formula for calculating PIT on income from securities transfer in Vietnam?

What is the formula for calculating PIT on income from securities transfer in Vietnam?

Under point b, clause 2, Article 11 of Circular 111/2013/TT-BTC amended by Article 16 of Circular 92/2015/TT-BTC, the formula for calculating PIT on income from securities transfer in Vietnam is as follows:

What is the formula for calculating PIT on income from securities transfer in Vietnam? (Image from the Internet)

What is the tax period for income from securities transfer in Vietnam?

Under Article 7 of the PIT Law 2007, amended by Clause 3, Article 1 of the Law on Amendments to PIT Law 2012 on tax period:

Tax period

1 For residents, tax period is specified as follows:

a/ Annual tax period, which is applicable to incomes from business, salaries and wages.

b/ Tax period upon each time of income generation, which is applicable to incomes from capital investment; incomes from capital transfer, except for incomes from securities transfer; incomes from real estate transfer; incomes from prizes; incomes from copyright; incomes from commercial franchising; incomes from inheritances; and gifts.

c/ Tax period upon each transfer or annual tax period, which is applicable to Incomes from transfer of securities.

.2 For non-residents, the tax period counted upon each time of income generation is applicable to all their taxable incomes.

Thus, the tax period for income from securities transfer in Vietnam is as follows:

- For residents: the tax period upon each transfer or annual tax period applies to come from securities transfer in Vietnam.

- For non-residents: the tax period counted upon each time of income generation applies to income from securities transfer in Vietnam.

* A resident is someone who meets one of the following conditions:

- Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;

- Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.

A non-resident is someone who does not meet the conditions of a resident.

What does income from securities transfer subject to PIT in Vietnam include?

Under point b, clause 4, Article 2 of Circular 111/2013/TT-BTC amended by Article 4 of Circular 25/2018/TT-BTC, the taxable incomes from securities transfer include:

incomes from transferring shares, call options on shares, bonds, treasury bills, fund certificates, and other securities; incomes from transferring shares of the persons in the joint-stock company.

What is the determination of income from securities transfer subject to PIT in Vietnam?

Under point a, clause 2, Article 11 of Circular 111/2013/TT-BTC, the taxable income from securities transfer is determined as the transfer price per transaction.

The transfer price of securities is determined as follows:

- The transfer price of securities of a public company that are traded at the Stock Exchange is the transaction price at the Stock Exchange. The transaction price is based on the order-matching result of prices from transactions at the Stock Exchange.

- The transfer price of securities of a public company that are not traded at the Stock Exchange but only transferred via the system of the Vietnam Securities Depository is the price stated in the securities transfer contract.

What is the time for determining income from securities transfer subject to PIT in Vietnam?

Under points c and d, clause 2, Article 11 of Circular 111/2013/TT-BTC, the timing for determining taxable income from securities transfer is as follows:

- For securities of a public company that are traded at the Stock Exchange, it is the time the taxpayer receives the income from securities transfer.

+ For securities of a public company that are not traded at the Stock Exchange but only transferred via the system of the Vietnam Securities Depository, it is the time the ownership is transferred at the Vietnam Securities Depository.

+ For the securities that do not fall into the cases above, it is the time the securities transfer contract takes effect.

+ When making capital contribution by securities without paying tax when making capital contribution, the time to calculate income from transferring securities to make capital contribution is the time the person transfers, withdraws capital.

- When receiving shares paid as dividend.

When receiving shares paid as dividend, the person might delay paying personal income tax when receiving shares. When transferring such shares, the person shall pay personal income tax on the income from capital investment and the income transferring securities. To be specific:

+ The basis for determining the personal income tax payable on the income from capital investment is the value of dividend in the accounting book or the quantity of actual shares received multiplied by (x) the face value of such shares and the rate of personal income tax on the income from capital investment.

If the transfer price of the shares paid as dividend is lower than the nominal price, the personal income tax on capital investment shall be calculated at the market price when the transfer is made.

If the person transfers the same type of securities after receiving shares paid as dividend, the person shall declare and pay personal income tax on the all the shares paid as dividends.

+ The basis for calculating the personal income tax payable on the income form transferring securities is guided in Point b Clause 2, Article 11 of Circular 111/2013/TT-BTC.