Does trading shares on foreign stock exchanges have to pay personal income tax in Vietnam? If yes, how much is the personal income tax payable?
Does the individual trading shares on foreign exchanges have to pay personal income tax in Vietnam?
Pursuant to Article 2 of Decree No. 65/2013/ND-CP stipulating as follows:
Taxpayers
1. Personal income tax payers include resident and non-resident individuals who earn taxable incomes specified in Article 3 of the Law on personal Income Tax and Article 3 of this Decree. Scope to define taxable income of taxpayers shall be as follows:
a) For resident individuals, their taxable incomes are incomes earned inside and outside the Vietnamese territory, regardless of where their incomes are paid;
b) For non-resident individuals, their taxable incomes are incomes earned in Vietnam, regardless of where their incomes are paid.
2. A resident individual means a person who satisfies any of the following conditions:
a) Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of his/her presence in Vietnam;
Individuals present in Vietnam under this Point means those whose presence is in the Vietnamese territory.
b) Having a place of habitual residence in Vietnam in either of the following two cases:
- Having a registered place of permanent residence under the law on residence;
- Having a rented house for dwelling in Vietnam under the law on housing, under a rent contract with a term of 183 days or more in a tax year.
In case an individual has a place of permanent residence in Vietnam as prescribed in this point but he/she actually presents in Vietnam less than 183 days in tax year and he/she fail to prove that he/she is resident person of other country, so he/she will be considered as resident person in Vietnam.
3. A non-resident individual means a person who does not satisfy any of the conditions specified in Clause 2 of this Article.
Thus, resident individuals with income arising inside and outside the Vietnamese territory must pay personal income tax.
Thus, resident individuals earning income from stock trading on foreign exchanges still have to pay personal income tax in Vietnam.
Does trading shares on foreign stock exchanges have to pay personal income tax in Vietnam? If yes, how much is the personal income tax payable?
In case of sale of shares on foreign exchanges, how much is the personal income tax payable?
Pursuant to Clause 3, Article 3 of Decree No. 65/2013/ND-CP (amended by Clause 4, Article 2 of Decree No. 12/2015/ND-CP) as follows:
Taxable incomes
Taxable incomes of individuals include the following kinds of income:
...
3. Incomes from capital investment, including:
a) Loan interest;
b) Share profits;
c) Incomes from other forms of capital investment, including capital contribution in the form of commodities, reputation, land use rights, inventions; except for incomes from Government bond profits, incomes after payment of corporate income tax of private companies and single-member limited liability companies under the ownership of individuals.
In addition, in Article 10 of Circular No. 111/2013/TT-BTC, the amount of personal income tax payable in case of stock trading on foreign exchanges is as follows:
Basis for calculating tax on incomes from capital investment
The basis for calculating tax on incomes from capital investment is the assessable income and tax rates.
1. Assessable income
Assessable income from capital investment is the taxable income earned by the individual according to Clause 3 Article 2 of this Circular.
2. The tax rate on the income from capital investment is 5% according to the whole income tax table.
3. Time to calculate the assessable income
The assessable income from capital investment shall be calculated when the taxpayer is paid by the income payer.
The times to calculate assessable income in some cases:
a) The income from additional value of capital contribution guided in Point d Clause 3 Article 2 of this Circular shall be calculated when the person actually receives the income when the enterprise is dissolved, converted, divided, merged, amalgamated, or when the capital is withdrawn.
b) The income from reinvested profit as guided in Point g Clause 2 Article 2 of this Circular shall be calculated when the person transfers or withdraws capital.
c) The income from dividend in shares guided in Point g Clause 3 of this Article 3 shall be calculated when the person transfers his shares.
d) Where the individual receives an income from outward investment in any shape or form, the assessable income shall be calculated when the person receives the income.
4. Tax calculation
Personal income tax payable = Assessable income x 5% tax
Thus, in case an individual residing in Vietnam has income from dividends and shares arising outside the territory of Vietnam, he/she must be subject to personal income tax.
The amount of tax withheld is determined by the dividend paid each time multiplied by the tax rate of 5%. Dividend payers are responsible for withholding personal income tax payable to the state budget.
Note: For income from dividends paid in shares, individuals do not have to pay personal income tax when receiving shares. When transferring shares, individuals must pay personal income tax on income from capital investment and income from securities transfer.
What are the incomes that are and are not subject to personal income tax withholding?
According to the provisions of Article 28 of Decree No. 65/2013/ND-CP and Article 29 of Decree No. 65/2013/ND-CP, incomes that are and are not subject to personal income tax withholding include:
(1) Kinds of income subject to tax withholding:
- Incomes of non-resident individuals, including also those who are not present in Vietnam;
- Income from salaries, wages and remunerations including remunerations from brokerage activity;
- Incomes of individuals from operation of insurance agents, lottery agents and multi-level goods sale;
- Incomes from capital investment;
- Incomes from capital transfer of non-resident individuals, transfer of securities;
- Incomes from won prizes;
- Incomes from copyright;
- Incomes from commercial franchising.
(2) Cases not subject to tax withholding but declaring and paying tax directly to tax offices:
- Incomes from business activities of resident individuals;
- Incomes from real estate transfer;
- Incomes from the contributed capital transfer of resident individuals;
- Incomes from inheritances or gifts of individuals.
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