In Clause 35, Article 3 of Decree 155/2020/ND-CP, there are regulations on the Upcom transaction system as follows:
In this Decree, the following terms are understood as follows:
35. “UPCOM” stands for “Unlisted Public Company Market”, which is a system organized and operated by stock exchanges for trading of unlisted securities.
At Point a, Clause 9, Article 2 of Circular 111/2013/TT-BTC, there are regulations on income from stock inheritance as follows:
According to Article 3 of the Law on Personal income tax and Article 3 of the Decree No. 65/2013/ND-CP, the incomes subject to personal income tax (hereinafter referred to as taxable incomes) include:
9. Incomes from inheritance
Incomes from inheritance are the incomes the person receives under a will or in accordance with regulations of law on inheritance. To be specific:
a) Inherited securities: shares, call options on shares, bonds, treasury bills, fund certificates, and other securities according to the Law on Securities; shares of the person in the joint-stock company according to the Law on Enterprises.
According to this Article, the Upcom trading system is a trading system for unlisted securities operated by the Stock Exchange. Therefore, stocks traded on the Upcom trading system are stocks traded on the Stock Exchange.
Thus, beneficiaries who inherit shares on the Upcom trading system will be subject to personal income tax in Vietnam.
At the same time, at Point a, Clause 1, Article 16 of Circular 111/2013/TT-BTC, amended by Clause 1, Article 19, Circular 92/2015/TT-BTC, there are regulations on bases for calculation of tax on incomes from inheritance and gifts as follows:
Bases for calculation of tax on incomes from inheritance and gifts
Bases for calculating tax on incomes from inheritance and gifts are the assessable income and tax rate.
1. Assessable income
The assessable income from inheritance and gifts is the excess over 10 million VND of the inheritance or gifts received. The value of inheritance and gifts is determined as follows:
a) The value of inheritance and gifts being securities is the value of securities at the time of registration of ownership transfer. Assessable income from an inheritance or gift being securities is the value of the inheritance or gift in excess of VND 10 million regardless of ticker symbols without any deductions at the time of registration of securities ownership transfer. To be specific:
a.1) The value of securities traded at the Stock Exchange is based on the reference price at the Stock Exchange at the time of registration of securities ownership.
a.2) The value of securities in cases other than the above is based on the book value provided by the corresponding issuer at the time of making the latest financial statement before the time of registration of securities ownership.
In Official Dispatch 5001/TCT-DNNCN of 2023, there are instructions for determining the basis for calculating personal income tax on income from inheritance as follows:
Stocks traded on the Upcom trading system are stocks traded on the Stock Exchange. Therefore, the value of inherited assets which are stocks traded on the Upcom trading system is determined according to the provisions of Point a.1, Clause 1, Article 16 of Circular No. 111/2013/TT-BTC dated August 15, 2013. 2013 (amended by Clause 1, Article 19 of Circular 92/2015/TT-BTC dated June 15, 2015 of the Ministry of Finance).
In short, individuals who inherit shares on the Upcom trading system will be subject to personal income tax and taxable income is determined as the asset value based on the reference price on the Stock Exchange at the time securities ownership registration point in Vietnam.
What are instructions for determining personal income tax when inheriting stocks on the Upcom trading system in Vietnam? (Image from the Internet)
In Article 4 of the Personal Income Tax Law 2007, supplemented by Clause 3, Article 2 of the Law Amending and Supplementing a Number of Articles of the 2014 Tax Laws; Amended by Clause 2, Article 1 of the 2012 revised Personal Income Tax Law stipulates that income exempt from personal income tax includes:
1. Incomes from transfer of real estate between spouses; parents and their children; adoptive parents and their adopted children; fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law; grandparents and their grandchildren; or among blood siblings.
2. Incomes from transfer of residential houses, rights to use residential land and assets attached to residential land received by individuals who have only one residential house or land plot each.
3. Incomes from the value of land use rights of individuals who are allocated land by the State.
4. Incomes from receipt of inheritances or gifts that are real estate between spouses, parents and their children; adoptive parents and their adopted children; fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law; grandparents and their grandchildren; or among blood siblings.
5. Incomes of households and individuals directly engaged in agricultural or forest production, salt making, aquaculture, fishing and trading of aquatic resources not yet processed into other products or preliminarily processed aquatic products.
6. Incomes from conversion of agricultural land allocated by the State to households and individuals for production.
7. Incomes from interests on deposits at credit institutions or interests from life insurance policies.
8. Incomes from foreign exchange remittances.
9. Wages paid for night shift or overtime work, which are higher than those paid for day shifts or prescribed working hours in accordance with law.
10. Retirement pensions paid by the Social Insurance Fund; retirement pensions paid monthly by the Voluntary Retirement Fund.
11. Incomes from scholarships, including:
a/ Scholarships granted from the state budget;
b/ Scholarships granted by domestic and foreign organizations under their study promotion programs.
12. Incomes from indemnities paid under life insurance policies, non-life insurance policies, compensations for labor accidents, compensations paid by the State and other compensations as provided for by law.
13. Incomes received from charity funds licensed or recognized by competent state agencies and operating for charity, humanitarian or non-profit purposes.
14. Incomes received from governmental or non-governmental foreign aid for charity or humanitarian purposes approved by competent state agencies.
15. Income from salaries, remunerations of Vietnamese crewmembers working for foreign shipping companies or Vietnamese shipping companies that provide international transport services.
16. Incomes from provision of goods/services directly serving offshore fishing earned by individuals being ship owners, individuals having the right to use ships, and incomes of crewmembers on ships.
In Clause 2, Article 8 of the Personal Income Tax Law 2007, there is a regulation that individuals are entitled to personal income tax refund in the following 3 cases:
2. Individuals are entitled to tax refund in the following cases:
a/ Their paid tax amounts are larger than payable tax amounts;
b/ They have paid tax but their taxed incomes do not reach a tax-liable level;
c/ Other cases decided by competent state agencies.