Guide to calculating personal income tax on incomes from capital investment in 2023? What are incomes from capital investment in Vietnam?
What are incomes from capital investment in Vietnam?
Pursuant to Clause 3, Article 2 of Circular No. 111/2013/TT-BTC (amended by Clause 6, Article 11 of Circular No. 92/2015/TT-BTC)
Incomes from capital investment are personal income in the form of:
(1) Interest on the loans given to other organizations, enterprises, business households, business individuals and groups of business individuals according to loan contracts or agreements, except for the interests paid by credit institutions and branches of foreign banks according to Point g.1 Clause 1 Article 3 of Circular No. 111/2013/TT-BTC.
(2) The dividends earned from capital contribution to purchase of shares.
(3) Profits from capital contributions to limited liability companies, partnerships, cooperatives, joint-ventures, business cooperation contracts, and other forms of business under the Law on Enterprises and the Law on Cooperatives; profits from capital contribution in establishment of credit institutions according to the Law on credit institutions, capital contributions to securities investment fund and other investment funds that are established and operated within the law.
Profits from capital investment of private companies and single-member limited liability companies under the ownership of individuals shall not be included in taxable income.
(4) The added value of capital contribution received when the enterprise is dissolved, converted, divided, split, merged, amalgamation, or upon capital withdrawal.
(5) Incomes from interest on bonds, treasury bills, and other valuable papers issued by Vietnamese organizations, except for the incomes defined in Point g.1 and g.3 Clause 1 Article 3 of Circular No. 111/2013/TT-BTC.
(6) The incomes from capital investment in other forms, including capital contribution in kind, by reputation, rights to use land, patents.
(7) Incomes from dividends paid in bonds, incomes from reinvested profit.
Guide to calculating personal income tax on incomes from capital investment in 2023? What are incomes from capital investment in Vietnam?
What are the regulations on calculation of personal income tax on incomes from capital investment in Vietnam?
Pursuant to Article 10 of Circular No. 111/2013/TT-BTC stipulating calculation of personal income tax on incomes from capital investment for residents 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.
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4. Tax calculation
Personal income tax payable = Assessable income from capital investment x 5% tax
Incomes from capital investment in Vietnam
The personal income tax on incomes from capital investment earned by a non-resident equals the total taxable income earned by the non-resident from capital investment in other organizations and individuals in Vietnam multiplied by (x) 5% tax.
The assessable income, time to calculate assessable income from capital investment earned by the non-resident are similar to those of a resident guided in Clause 1 and Clause 3 Article 10 of this Circular.
Thus, personal income tax on incomes from capital investment for residents is calculated as follows:
Personal income tax payable = Assessable income from capital investment x 5% tax
In which:
- Assessable income from capital investment is the taxable income earned by the individual according to Clause 3 Article 2 of Circular No. 111/2013/TT-BTC.
When is the time to calculate the personal income tax on incomes from capital investment in Vietnam?
The time to calculate personal income tax on incomes from capital investment is specified in Clause 3, Article 10 of Circular No. 111/2013/TT-BTC and Article 19 of Circular No. 111/2013/TT-BTC as follows:
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:
- The income from additional value of capital contribution 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.
- The income from reinvested profit shall be calculated when the person transfers or withdraws capital.
- The income from dividend in shares shall be calculated when the person transfers his shares.
- 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.
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