To enhance the management of PIT from capital investment for dividends paid in shares in Vietnam

To enhance the management of PIT from capital investment for dividends paid in shares in Vietnam (Internet image)

On May 2, 2024, the General Department of Taxation of Vietnam issued Official Dispatch 1806/TCT-DNNCN regarding the enhancement of the management of PIT from capital investment for dividends paid in shares and bonus shares for existing shareholders.

To enhance the management of PIT from capital investment for dividends paid in shares in Vietnam

To strengthen the management of PIT from capital investment and ensure that the taxpayers, who are individuals receiving dividends in shares and bonus shares, as well as the organizations responsible for tax return and payment on behalf of individuals, clearly understand their obligations to declare and pay PIT on income from capital investment when individuals transfer shares of the same type in accordance with the law, the General Department of Taxation requests the Tax Departments to implement the following:

(1) Propaganda, support, and guidance for taxpayers:

The Tax Departments are requested to develop a propaganda plan suitable for the actual management of PIT in their respective areas to inform individuals receiving dividends in shares and bonus shares, as well as organizations responsible for tax return and payment on behalf of individuals (including securities companies, commercial banks with securities deposit activities, fund management companies, and securities issuers), about their obligations to declare and pay tax on income from capital investment starting from January 1, 2023, when individuals transfer shares of the same type. For shares recorded in securities accounts before December 31, 2022, which have not been declared or paid taxes by organizations on behalf of individuals, the Tax Departments will guide individuals to declare and pay taxes, and provide instructions on related matters and the timeframes according to the regulations in Article 16, Clause 11 of the Law on Tax Administration.

The General Department of Taxation has developed instructional materials on declaring and paying PIT on dividend income received in shares (Appendix 01 - Propaganda materials and guidelines for individuals receiving dividends in shares, Appendix 02 - Propaganda materials and guidelines for organizations declaring on behalf of individuals receiving dividends in shares). The Tax Departments are requested to send these materials to the organizations responsible for tax declaration and payment on behalf of individuals, and the organizations should disseminate this information to individuals who are shareholders or have securities trading accounts to ensure their awareness and compliance.

(2) Monitoring the tax return and payment on behalf of individuals by organizations:

For organizations responsible for tax declaration and payment on behalf of individuals who have not fulfilled their obligations to declare and pay tax on behalf of individuals, the Tax Departments shall implement tax management measures as prescribed to review and supervise the organizations' compliance with their obligations to declare and pay personal income tax on dividend income received in shares and bonus shares for individuals in accordance with the regulations. (referring to Appendix 03 - List of organizations that have fulfilled their obligations, such as securities companies, and Appendix 04 - List of organizations that have fulfilled their obligations, such as securities issuers, at the address ftp//:ftp.tct.vn/public/VPTCT/DNNCN/TaiLieu2024).

(3) Inspection and examination:

Implement risk management principles in tax administration to conduct inspections at the tax offices of securities companies, commercial banks with securities deposit activities, fund management companies, and securities issuers according to regulations. In cases of detecting risks, inspections and examinations should be conducted at the taxpayer's premises as prescribed. During the inspection and examination process, attention should be given to reviewing the tax declaration and payment on behalf of individuals (receiving dividends in shares, receiving bonus shares) and the tax declaration and payment by individuals on income from capital investment when individuals transfer shares of the same type in accordance with the law.

(4) Reporting regime:

The Tax Departments shall implement a reporting regime by submitting consolidated reports no later than the 5th day of each month and ad hoc reports upon request in the specified format (Appendix 05 - Review form on the implementation of tax declaration and payment on income from capital investment for individuals at the address ftp//:ftp.tct.vn/public/VPTCT/DNNCN/TaiLieu2024) to the General Department of Taxation (Department of DNNCN) via the email address hmduc@gdt.gov.vn.

In case the Tax Departments receive requests for coordination from other Tax Departments regarding the review of organizations responsible for tax declaration and payment on behalf of individuals and individuals related to dividend shares and bonus shares, they should proactively and seriously carry out the coordination work.

More details can be found in Official Dispatch 1806/TCT-DNNCN dated May 2, 2024.

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