Personal Income Tax Rates from Software Transfer?

Income from royalties subject to personal income tax is stipulated in Clause 7, Article 2 of Circular 111/2013/TT-BTC, whereby:

Income from royalties is income received from the transfer, assignment of ownership rights, usage rights of intellectual property objects as stipulated by the Intellectual Property Law; income from technology transfer as prescribed by the Technology Transfer Law. Specifically, as follows:

- Objects of intellectual property rights comply with regulations stipulated in Article 3 of the Intellectual Property Law and related guiding documents, including:

+ Objects of copyright include literary works, artistic works, scientific works; objects of related rights to copyright include: recording, filming of broadcast programs, satellite signals carrying encrypted programs.

+ Objects of industrial property rights include inventions, industrial designs, layout designs of semiconductor integrated circuits, trade secrets, trademarks, commercial names, and geographical indications.

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According to the provisions of Article 16 of the Personal Income Tax Law 2007:

- Taxable income from royalties is the portion of income exceeding 10 million VND that the taxpayer receives when transferring, assigning the usage rights of intellectual property objects, technology transfer under each contract.

- The timing of determining taxable income from royalties is the time the organization or individual pays the income to the taxpayer.

- Tax Rate:

According to Clause 7, Article 2 of the Law amending Tax Laws 2014, the flat tax rate from the transfer of royalties is 5%.

Thus, for individuals with income from software transfer exceeding 10 million VND, this income is subject to personal income tax at a tax rate of 5%.

Sincerely!